The 29-year-old, who played for Warwickshire and Derbyshire before joining Glamorgan in 2010, is now tied to the Welsh county until the end of the 2015 season.
Wagg said: "I'm delighted to sign a new contract with Glamorgan, my family are settled in Cardiff and it's a great place to play cricket."
He continued: "I came to Glamorgan to help the club win silverware. We haven't got there yet, but the club is ambitious and keen for success.
"We've got a talented bunch of lads in the dressing room and we're determined to be competitive next year."