The 21-year-old Portuguese play-maker has agreed to stay at Molineux until 2023, the Express & Star understands.
Neves was a key player of boss Nuno Espirito Santo's title-winning campaign last year in the Championship, and Wolves want to keep him long term.
He was Wolves's Player of the Season last year and was named in the Championship Team of the Year by the Professional Footballers' Association.
He also won Sky Bet's April Goal of the Month award for his stunning volley against Derby.
It is the latest business for Wolves as Nuno looks to build his squad ahead of the club's Premier League return.
They have already signed Portugal goalkeeper Rui Patricio and Mexican striker Raul Jimenez, the latter on loan from Benfica, alongside tying down forward Diogo Jota and defender Willy Boly on permanent deals.