Roberts, who has been at the club for almost a decade, has agreed a two-and-a-half-year deal, the Saddlers have announced.
The 23-year-old has made 15 of his 16 first-team appearances for the club this season and is looking forward to continuing his development.
He told the club’s official website: ‘I feel very proud and privileged.
‘I’ve been here since I was 14 and it’s been an honour. I’m glad it can continue.
‘It gives me a massive confidence boost. Getting in the team gave me confidence but knowing I’ve got the backing for the next two-and-a-half years feels great.’
Watford boss Javi Gracia does not think Abdoulaye Doucoure's form will be affected by his omission from France's latest squad.