Hamilton, a seven-time world champion, will stay at Mercedes until the end of the 2023 season after his new contract was signed on Friday and announced on Saturday.
Wolff said Hamilton's title battle with Max Verstappen this year had reignited his driver's desire to continue in F1, but that the possibility of retirement was also discussed.
"I think he knows pretty well how he feels about racing," Wolff said when asked if Hamilton considered leaving F1. "That passion burns strongly.
"In a way the tough championship has ignited even more fun with us to fight, and next year looks really exciting.
"We talked about retirement and it's always really important to have that flirt with retirement, but equally be in control of your own destiny.
"I think at this stage there is so much passion for the sport that I can see him going for a while."
After Hamilton only committed to a single year deal for 2021 at the start of this year, it was rumoured that team and driver may have struggled to reach an agreement over money.
However, Wolff said the financial aspect of the contract was relatively straightforward and most of the focus in the talks was based around how to develop a joint charitable foundation between Hamilton and Mercedes aimed at supporting greater diversity and inclusion in motorsport.
"There were no sticking points [in the negotiations]," Wolff said. "Because of our discussions in the winter we knew what was important for Lewis, Lewis knows what our boundaries are.
"There were no difficult decisions around money or terms, it was more around what were the joint activities that we want to deploy, continue our foundation work, and carve that out in the right way."
Hamilton, F1's only Black driver, has been outspoken about the lack of diversity in the sport, and Wolff believes that bringing about change in that area was also a driving factor in Hamilton's decision.
"I think his fight for diversity and equality has in a way closed the circle, he is such a global personality that he utilises his voice for change and for good," Wolff said. "We've seen the various activities in the past that he had an interest, but this is just so close to his heart that he follows it with the same passion and power like he does motor racing.
"And his motivation to continue is just the will to win and succeed, especially in times when new regulations come, to work with the team and support the team to have the best possible car and power unit. And to be the best himself.
"Not necessarily looking at the other drivers or the next generation, just about meeting his own expectations in the same way we want to meet our own expectations and jointly we'll achieve that."