Ramsdale had been previously named in the Three Lions' provisional 33-man squad – but missed the cut.
But he has now been elevated into the squad after Manchester United goalkeeper Henderson, who spent two season-long loan spells at Bramall Lane, withdrew from the party due to a problematic hip issue which has limited his involvement in training.
Uncapped Ramsdale and West Brom keeper Sam Johnstone, who made his debut in England's final friendly against Romania at Middlesbrough on June 6, will now serve as back-up to number one Jordan Pickford.
Uefa rules enable goalkeepers to be replaced on medical grounds if they pick up an injury in the tournament.
An England statement read: "Aaron Ramsdale has replaced Dean Henderson in England’s UEFA EURO 2020 squad.
"Henderson withdraws with a hip issue that would continue to limit his involvement in training throughout the tournament.
"Under UEFA regulations, squads are permitted to replace goalkeepers on medical grounds at any stage.
"The Manchester United goalkeeper will now return to his club for further assessment and rehabilitation ahead of the 2021-22 season.
"Ramsdale was originally a member of Gareth Southgate’s pre-tournament group in Middlesbrough having played for England at this year’s UEFA U21 EURO in Slovenia in March.
"The Sheffield United player, a 2017 UEFA U19 EURO winner, will now follow standard COVID-19 testing protocol before entering the camp."
Ramsdale, a previous regular for the England under-21s, was named as the Blades' player of the season for 2020-21.
Referencing his shock when named in the provisional party, he posted on Twitter: “No matter what happens in the coming weeks, I am so honoured to be called up to the provisional squad. I’m lost for words."