The 20-year-old lock, who can also play in the back row, made his debut against Leicester in February and has gone on to turn in a string of fine displays despite the London club's disappointing end to the campaign.
The former Worthing RFC player has also been capped by England Under-20s and is part of the Red Rose squad for the upcoming Junior World Championship in Italy.
Launchbury said: "I'm pleased that the club have shown faith in me by offering me a lengthy contract and I was delighted to sign it. From a personal point of view this season has been great for me and I didn't think I would get as many first-team opportunities as I have.
"I've got a lot to learn and with the quality of coaching we get at Wasps as well as the experienced players I have around me, this is the right place for me."
Wasps head coach Shaun Edwards added: "It is marvellous news for the club that Joe has signed a new deal. Players like Joe are the future of London Wasps and he is a dedicated professional who works incredibly hard on all aspects of his game.
"He is improving all the time and hopefully that can result in him having a very successful career at all levels."
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