Rees, who won his third cap during England's record 43-13 RBS 6 Nations defeat to Ireland nine days ago, has committed himself to the Guinness Premiership club until 2009.
Rees, 22, joined Wasps as an 18-year-old, and is tipped for an England starting role against France at Twickenham next Sunday.
He said: "Over the last few seasons the chance to have been a part of what Wasps have achieved has been a major attraction to many players, and to be involved with the team and work with some fantastic people during that time has been of huge benefit to me.
"There is now a group of talented young players who are starting to break through into the first team at Wasps who I think will play a dominant role for this club and in rugby in the years to come.
"I want to be a part of that and I am looking forward very much to working with those players at Wasps over the next two years."