Jimenez moved to Wolves from Benfica in 2018 and has since scored 46 times in 103 appearances.
"I am delighted to be here and to be at this great club," he said. "Since I was a little boy, I just wanted to play, I wanted to enjoy it, live it, and that's why I am here for.
Jimenez signs a contract extension amid interest from a number of clubs from across Europe for the player's signature.
"It didn't take much persuading. It was easy for me to say yes because since the beginning, this is what I was looking for," Jimenez said.
"They [Wolves] give me all the confidence and the opportunity to be an important guy at the front, and that's what I was looking for when I arrived into Europe, and I'm very happy to continue at this club."
The player has been crucial in manager Nuno Espirito Santo's success at Wolves, with the club qualifying for the Europa League in their first season back in the top flight.
"The last two seasons we have given very good performances, so I knew this club has something special and I'm part of a big family here," he said.
"I think Wolves are getting the best out of me, and I'm giving Wolves my best football, but they are giving the best to me too."
This season the forward has featured three times managing to score twice in the Premier League so far.