"I have really enjoyed my time here at Bristol but when the opportunity came along to join the Dragons and return to Wales, I couldn't say no," Henson told the Dragons' website.
"I still have loads to offer and I know what (head coach) Kingsley (Jones) wants from me."
Henson's colourful career has taken in stints at Ospreys, Bath, Saracens and Toulon while he also played one test for the Lions in 2005. He was part of the Wales teams that won Six Nations Grand Slams in 2005 and 2008.
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"I'm looking forward to pitting myself against the current Welsh players, and hopefully becoming a catalyst and mentor for the tremendous talent in the Dragons squad," Henson, who has played a variety of roles including flyhalf and centre, said.
(Reporting by Martyn Herman; Editing by Toby Davis)
