The 21-year-old, who had 12 months remaining on his previous deal, will remain at Belle Vue until the end of 2017.
"It's fantastic news that Reece wanted to extend his deal with us," Wildcats coach James Webster told the club's official website.
"He had a lot of interest from other places and realistically, you need to look at what Reece has done at the age of only 21. He's only going to get better."
Lyne joined Wakefield from Hull FC two years ago.