The 46-year-old, whose existing deal was due to expire next summer, is now tied down to the Terriers until 2021.
Wagner had been linked with a move away from the West Yorkshire outfit following his impressive work over the past two seasons, having kept the club in the Premier League following their promotion in May 2017.
Two weeks on from revealing that contract discussions had begun, though, Town have confirmed that the German will remain in charge for the long term, while coaching staff Christoph Buhler and Andrew Hughes have also agreed identical deals.
"I'm very happy that we can announce David, Christoph and Andrew's new contracts today on the back of a superb debut Premier League season," chairman Dean Hoyle told Huddersfield's official website. "I understand why David is so talked about and sought-after given the things he has achieved here; he's a very talented head coach and has played a huge role in transforming Huddersfield Town into the club it is today.
"However, I have never had any doubts about David's future. Time and time again, he has shown his commitment to Huddersfield Town, as the club has demonstrated its commitment to him. It's also important that the futures of Christoph and Andrew are secure. They've played integral parts in the success we've all enjoyed.
"Together, they make a fantastic, talented coaching team as they all bring different skillsets to the table. We have a fantastic working relationship and we're looking forward to taking on the challenge of establishing Huddersfield Town in the Premier League together."
Wagner had been touted as a target for Premier League rivals Everton and Bundesliga side Eintracht Frankfurt.