The 24-year-old Mali international missed most of last season with a cruciate ligament injury, but has played 19 matches this term.
Head coach Paul Lambert told the club website: "He has been great since I have been here having come back from a long-term injury.
"And he is still only a young guy. He has his whole career in front of him."
Dicko scored 15 goals in 40 appearances for Wolves in the 2014-15 season, but his injury lay-off meant he played just six matches last season.
His only two goals so far this term came in the EFL Trophy victory over Crewe in October.
Lambert added: "Players like Nouha are really difficult to find, with such genuine speed.
"He is a major threat to opposition defenders with his pace and now I think he just needs to get a goal under his belt."
Striker Nouha Dicko has signed a new deal which will keep him at Championship club Wolves until 2020.