Henderson was raised by his teenage mother in the eastside of Austin, Texas. In 1969 he moved to Oklahoma City to live with his grandmother for a more stable environment. Although he became an all-city defensive end, he was not recruited by colleges. After graduation he joined the Air Force, but quit before being sworn in. Henderson attended and played college football at the NAIA school Langston University. Gil Brandt, the chief scout of the Dallas Cowboys, noticed him and selected him in the 1st round (18th overall) of the 1975 NFL Draft.
Henderson excelled as an outside linebacker, earning All-Pro honors for the 1977 season. Lawrence Taylor, perhaps the greatest player ever at the position, said that he was inspired to wear 56 because it was Henderson’s number.  Henderson earned the nickname "Hollywood" for his flamboyant play and high-visibility lifestyle. "Hollywood" was such a good athlete that the Cowboys used him to run reverses on kickoffs, and he returned one for a touchdown. He was one of the first linebackers to run a 4.6 in the 40-yard dash. He helped lead the Cowboys to three Super Bowls, including a win in Super Bowl XII.
However, his destructive lifestyle of drugs, alcohol, and women began to catch up with him. During many games, he snorted liquid cocaine from an inhaler he hid in his pants. The final straw came in 1979 against the Washington Redskins at RFK Stadium. While his team was being soundly beaten 34-20 on national television, Henderson was mugging for the camera and displaying handkerchiefs with the Cowboys team logo. When interviewed about it, he blamed teammate Preston Pearson, saying that Pearson had asked him to show off the handkerchiefs, which Pearson was marketing, as a favor. Coach Tom Landry was so angered by the episode that he deactivated Henderson for the rest of the season. "Landry had given me plenty of warning," Henderson admits. The next year would be his last, as he bounced from the Houston Oilers (1980) to the San Francisco 49ers (1980), while injured and continuing to use drugs.
In November, 1983, Henderson was arrested for smoking crack cocaine with two teenage girls in California. He was accused of threatening with a gun and sexually assaulting them. He claimed that he gave them crack in exchange for consensual sex. He pleaded no contest to the charges and served eight months in court-ordered drug rehabilitation as well as two years in prison. He states that "Hollywood" died on November 8, 1983, and he has remained clean and sober ever since. His autobiography, Out of Control: Confessions of an NFL Casualty, written with co-author Peter Knobler, was published in 1987. In 1993, his old coach and critic Tom Landry was among those who congratulated him on ten years of clean living.
Henderson made the news again in 2000 by winning the Lotto Texas $28 million jackpot. He started a charity (East Side Youth Services & Street Outreach) and has made major donations to the East Austin community where he grew up. He currently gives motivational speeches and sells videos of his anti-drug seminars (HHH 56 Investments Ltd.). When asked by the Dallas Morning News what he does every day having won the lottery, Henderson responded, "Not a damn thing, and I don't start that until after lunch."