The 19-year old defender, who was the first Academy player to sign professionally with the senior team, has re-signed with the Reds which has delighted head coach Paul Mariner.
"This is another positive step for our football club, signing another promising young defender for the long term," said Paul Mariner.
"Doneil possess a great amount of skill and the scary part is he is only 19 years old. He has proven to be an important part of our club and will continue to be for years to come."
Henry, who made his international debut for Canada against Trinidad & Tobago earlier this month, was thrilled to commit himself to the Toronto cause.
"I'm very proud to re-sign with Toronto FC and ensure I will remain here for the next few years," said Henry.
"I have learned a lot in my time with the Academy and in the First Team. Being from Brampton and playing for my home club is a dream come true and I'm happy to be able to continue on with Toronto FC."