The 2m-tall swingman played six games for the Nuggets at the back end of the season and averaged 12.8 points and 6.8 rebounds.
Henry's signature comes as no great surprise. He indicated he was keen to return at the end of the season and has made good on that commitment.
"I'm excited to come back down," Henry said.
"I feel like I have some unfinished business down there because I wasn't able to play the whole season because of my commitments with the Breakers.
"In the six games I was there I just felt, if we had a bit more time, we would have made a push for the playoffs."
Henry will be joined by former Breakers team-mate BJ Anthony, whose signature was confirmed by the Nuggets last week.
Talented United States centre Antoine Tisby is also expected to return, though it is uncertain whether fellow American Akeem Wright will join him.
Wright has other commitments and would miss the first two weeks of the National Basketball League.
Basketball Otago general manager Markham Brown said he was thrilled Henry would be returning for a second stint.
"We're really excited. He is a versatile player and showed in the six games he played for us last season how much he has to offer," Brown said.
"I think he will complement the rest of the cast and will be a vital part of the squad."
The Nuggets won six games last season. It was the franchise's best season since 2003 and there is hope in the camp the team can build on those improved results next year.
Former Tall Blacks guard Mark Dickel will return for the second term of his two-year contract and his combination with Henry and Anthony ought to give the long-suffering fans some more relief.
Tisby is one of the best centres in the competition, and should Wright return, the Nuggets will have a formidable starting five, more than capable of guiding the franchise to it first appearance in the post-season since 1997.
