It's quite a raise for Wake, who will earn $615,000 in base salary in 2012.
Wake, who could have become an unrestricted free agent next spring, had been looking for a new contract and he was a no-show at the Dolphins' voluntary minicamp last month.
Since joining the Dolphins in 2009 after earning CFL Most Outstanding Defensive Player honors twice, Wake has been Miami's best pass rusher.
After recording 5.5 sacks in part-time duty in 2009, Wake led the team with 14 sacks in 2010 when he was selected to the Pro Bowl. His sack number dropped to 8.5 last season, but he became a more well-rounded linebacker.
"We are pleased that we were able to reach an agreement with Cam and his agent, Paul Sheehy, to extend Cam's contract," Dolphins General Manager Jeff Ireland said in a team-released statement. "Cam has been a productive player ever since he joined the Dolphins, and has been a great teammate and an outstanding citizen. His work ethic and professionalism on the field and in the locker room has made him a leader by example. We also appreciate all the community activities he has done. We always try to reward our own players for their contributions to the team and Cam certainly deserves that recognition. I want to thank Cam and Paul for their hard work in getting this extension done."
The 6-3, 260-pound Wake enters his fourth season with the NFL, all with the Miami Dolphins. In his career, he has played in 46 games with 31 starts. Wake has notched 28.0 sacks, seven passes defensed and four forced fumbles over the last three seasons.
Wake played collegiately at Penn State where he was a four-year letter winner. He finished his college career with 191 total tackles, two forced fumbles, 8.5 sacks and 24 tackles for losses as well as seven blocked kicks. Born Jan. 30, 1982 in Beltsville, Maryland, Wake attended DeMatha High School (Hyattsville, Md).