The 22-year-old has put pen to paper on an improved three-and-a-half-year contract after impressing head coach Paul Lambert since the Scot was appointed in November.
Evans spent last season on loan with Sky Bet League One club Bradford but has made 10 appearances for Wolves this campaign, and Lambert thinks there is more to come from the player.
He told the club’s official website: “I think it’s very important. He’s very similar to Jack Price and they’ve both done brilliantly well since I’ve been here.
“His performances against Stoke and Liverpool in the FA Cup emphasised how much we need that competition in the middle of the pitch.
“Evans, Price and Connor Ronan are all really good passers of the ball and I think you need that in this league.
“It’s in his own hands now. He knows what we expect of him, he knows how we play and he knows what we’re looking for.
“He’s still got a lot to learn but he’s got terrific potential and he’s a brilliant passer of the ball as well as a physical presence. He’s still a young lad but hopefully he keeps getting better and better.”