The 43-year-old Gerrard arrived at Al-Ettifaq last July on a two-year deal but his team are a modest eighth in the Pro League table, 28 points behind leaders Al-Hilal.
"This is very pleasing for myself and my family and feels like recognition for a lot of hard work and commitment," said former England captain Gerrard in a statement.
"We knew at the beginning this was a big job and a challenging job, but a lot has been achieved."
He added: "I also understand my position, it's a results business. I never take that for granted. I understand where we are in the league, but I am very confident we will improve."
Earlier Thursday, 33-year-old Henderson left Al-Ettifaq after only six months at the club to join faltering Dutch giants Ajax.
Henderson, like Gerrard a former Liverpool captain, was earning a reported £700,000 per week in the kingdom.
His move to Saudi sparked accusations of hypocrisy given Henderson's outspoken support for the LGBT+ community.
Homosexuality is illegal in Saudi Arabia.
