The 26-year-old missed all of the 2014 campaign after suffering a serious Achilles injury.
But he will return to action next year when he will also take over leadership of the club on all fronts having replaced Stephen Peters.
Wakely led the Steelbacks to Twenty20 success in 2013 but has now also been given responsibility for leading the LV= County Championship side as well.
His current deal was due to run out at the end of next summer but has now had a further 12 months added to it.
He said: “I am very happy to be extending my contract with Northants.
“It’s a fresh start for me and a second chance really, after coming back from injury.
“Looking ahead, I can see no reason why the team cannot push for further honours and start to win trophies again.”
Head coach David Ripley added: “I see exciting times ahead for Alex.
“He has shown his tactical awareness and leadership skills in our 2013 T20 win and now has the chance to manage and lead the dressing-room on a daily basis.
“I look forward to supporting him with that and helping him back to being a heavy run scorer for us, in all formats, after his injury.”