The new contract, which is not yet signed, includes a salary increase to $750,000 and will be funded entirely with private money, athletic director Ed McLaughlin said. Wade's first contract had run through 2020 and was worth $1 million per year in base salary and supplemental compensation, the Richmond Times-Dispatch reports.
"Coach Wade did an excellent job with our program this year, and we are excited about our program's future," McLaughlin said in a statement. "He and I agreed completely on all of the enhancements that our program needed to continue our elite level of success."
McLaughlin said he began looking at ways to enhance compensation for Wade and the program during the season. The enhancements agreed upon, he said, are in keeping with what other top 25 programs are doing, he said, and his expectations continue to be that the Rams succeed like a top program.
"I certainly think we are a program that could and should be in the second weekend of the NCAA tournament," he said.
The Rams went 25-11 in Wade's first season as head coach and reached the second round of the NCAA tournament, the Rams' sixth straight appearance in the Big Dance.
"I am focused on VCU Basketball and the student-athletes within our program. My wife and I love it here at VCU and we are very excited about the 2016-17 season and beyond," Wade said in the release. "Ed McLaughlin and I continually meet to assess the state of our program to ensure that we are employing the resources necessary to compete at the highest level."
The Rams have played in the Atlantic 10 championship game in each of their four seasons in the league, winning the title in 2015. They are one of just eight schools to have advanced to the NCAA tournament in each of the past six seasons and one of two, along with Kansas, to have won 24 or more games for 10 straight seasons.
Wade took his first head-coaching job at Chattanooga in 2013 after four seasons as a VCU assistant under Shaka Smart. He is 65-36 as a head coach.
Sources told ESPN that Wade had been contacted about the Vanderbilt coaching opening. Wade's family is from Nashville, Tennessee.
"While it is flattering whenever a member of your staff is talked about at other institutions, I never worried that Will wouldn't be our coach," McLaughlin said. "His commitment to VCU is unparalleled, and we look forward to him leading our men's basketball program for a long time."
This year, the Rams won a share of the A-10 regular-season title after losing Treveon Graham and Briante Weber to graduation, having their top freshman transfer and seeing all three recruits who signed when Smart was the coach decide to go elsewhere after he resigned to take the same job at Texas.
"For us to be able to put our season together and grow during the season like we did, I think he did a tremendous job," McLaughlin said.
The Associated Press contributed to this report.