The Portuguese youngster joined the Midlands club last July to reunite with former manasger Nuno Espirito Santo, and has been pivotal to the club's fantastic season so far.
Jota has netted 12 times in 30 appearances in Wolves colours to become joint-top scorer, and has been generally impressive throughout, and as reported by the club's official website, a delighted executive chairman Jeff Shi said: "Diogo has been an important player for Wolves this year and his abilities are clear for everybody to see.
"As a management group, our aim is to provide the head coach with a playing squad that gives him the best possible chance to succeed and I believe Diogo is certainly a player that does that, and will continue to do that beyond this season.
"Whilst the agreement won’t be fully confirmed until the 1st July, by making this statement of our intent, it again allows us to be as open and honest with the fans as we can be with regards to how we wish to take the club and the squad forward."
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Despite being just 21, Jota has already made over 100 career appearances and tasted international football at various youth levels, and it looks as though the Premier League beckons next for the exciting former Porto player, with Wolves looking strong for automatic promotion.