The Terriers announced on Wednesday afternoon that the 46-year-old, who joined the club from from Borussia Dortmund II in November 2015, has put pen to paper on a deal that runs through to 2021.
Wagner has worked wonders during his two-and-a-half seasons in West Yorkshire, changing the club's style of play and guiding them up to the Premier League in his first full campaign at the helm, before surviving the drop in 2017-18.
Having been touted as a possible target for Everton and Eintracht Frankfurt, as well as the odd link with the vacant assistant manager's job at Liverpool, the German claims that remaining at Huddersfield was an easy choice to make.
"The decision to extend my stay at this club was not a difficult one," he told Town's official website. "The relationship Christoph [Buhler], Andrew [Hughes] and Dean [Hoyle], the rest of the board, the staff and the supporters is special. We've achieved some incredible things together in two and a half years and now I'm excited about the future.
"We still have a lot of work to do as we adapt to life in the Premier League, but this club and its people have the ambition, desire and attitude to take this challenge on.
"Finally, a message to Huddersfield Town fans everywhere. Thank you for the support you have shown us and the players since I joined the club; it's been such a big factor in the success we've enjoyed."
Huddersfield finished the 2017-18 campaign 16th in the Premier League, despite being installed as favourites to finish bottom.