The Union J band member said that his mentor on the show, Louis Walsh, encouraged him to come out.
JJ, Josh, Jaymi and George
"I spoke to Louis about this, and he said, 'Put it this way, both of my big boybands [Boyzone and Westlife] had a gay member in them'. So he said it fits the formula quite well!" Hensley told The Sun.
"Every boyband has got to have a gay one! And Louis just said 'do it'.
"I'm gay and I've never been happier!"
Hensley said that his Union J bandmates have known about his sexuality since the group was formed.
"They have always supported me with doing this," he explained. "I didn't want to do it in five years' time when I have made money and had a career. I don't think anyone should have to hide who they are.
"Not enough people in the music industry are open about their sexuality."
JJ, George, Josh and Jaymi
The 22-year-old also revealed that he has been in a relationship with his boyfriend for three years.
"I came on to the show not wanting to be judged for my personal life. But people have caught wind of it and I just wanted to set the record straight," he said.
"It is not a big thing for me. I came out when I was 14 to my family and friends and never had one piece of negativity... There could be negative people, but they are just sad and stuck 20 years ago."
He continued: "I hope the reaction will hopefully be: 'OK, we kind of knew, but well done on coming out.'"
Hensley admitted that he was slightly concerned people would think his decision was a cry for attention, especially since a number of openly gay acts entered the show.
"I don't want people to think I have hidden this to gain votes because I am so proud of who I am," he said. "I hope people respect me for being honest."
The singer from Luton said that by coming out publicly, he hopes to inspire others who are struggling with their sexuality.
"I got a tweet from a boy who must have been 13 or 14 asking if the rumours that I was gay were true," he said.
"He said he really wished I could be out because he didn't have anyone to look up to and was finding it really hard to fit in and tell his parents.
"I was that kid at 14 and really wish I had someone to say it was OK to be pictured on the red carpet with a guy and be gay in a boyband.
"[Will Young and Joe McElderry] have been an inspiration and hopefully I can be one too. If I can help just one kid out there, that is enough for me.
"The X Factor is such a great show to show that - you've got such a great range of characters, especially Rylan who is so open. It was like if he can do it, why can't I?
"But I'm not going to suddenly come out and do a flamboyant performance. That's Rylan's bag!"
The X Factor continues tonight (November 18) at 8pm on ITV1.
Photo gallery - The X Factor Guilty Pleasures week:
Copyright: Ken McKay/Thames/Rex Features