The new deal comes after the 42-year-old Frenchman was dismissed in January by Monaco after a disastrous run for the club, Praizenews report.
Out of the 20 games for Monaco, Henry managed to win just four games, with his side losing 11 and sitting in the 19th spot in Ligue 1.
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Speaking of the new deal, Henry told Montreal’s website: “It’s an honour to become head coach of the Montreal Impact and return to MLS.
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“It’s a league that I know well where I had a great time. Being in Quebec, in Montreal, which has a huge multicultural heritage, is something extraordinary.
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“I have always had an eye on this club and now I am there. ”
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