Dicko joined Wolves from Wigan Athletic in January 2014 and has been a success for Kenny Jackett’s side.
The Mali international scored 14 goals and created 40 chances in 37 Championship appearances in the 2014-15 season.
The 23-year-old had a pass accuracy of 78% and a shot accuracy of 58%, and won 19 headers, 37 dribbles and 18 tackles.
The former Strasbourg player will be important for Wolves next season, as they aim to gain promotion to the Premier League.
Following Dicko signing a new deal, three of his Wolves teammates took to Twitter to welcome the club’s decision.