The 20-year-old all-rounder from Worksop took 30 first class wickets at an average of 30 in an impressive 2015 season.
The former England under 19s international, one of a trio of homegrown fast bowlers that impressed during the 2015 campaign alongside Brett Hutton and Jake Ball, is now committed to the club until the conclusion of the 2018 season.
While it was a remarkable innings of 100 from 96 balls against Sussex batting at number nine that earned the most headlines, Wood’s left-arm seam and swing has brought him three wickets in an innings on four separate occasions during the LV= County Championship campaign.
“It’s nice to get that security of three more years playing for my home county,” he said.
“I’ve averaged 30 with the bat and ball in 2015, scored a century, scored 400 runs and finished with 30 wickets. For my first year as a professional, I’ve got to be happy with that.
“Hopefully I can build on what I’ve done this season and push myself into contention for all formats of the game.”
Wood, who earned his place in the first team three games into the season and went on to play 11 matches, earned a nomination for the LV= County Championship Breakthrough Player Award and has earned a call-up for the England Performance Programme (EPP) this winter.
“Luke is a talented young cricketer who earned his run in the first team on merit and did himself proud with some good performances,” said director of cricket Mick Newell.
“The century he scored against Sussex was a remarkable innings which showed us how dangerous a player he can be with the bat, and that’s something we’ll continue to work on.
“Bowling remains his number one role and the way he performed this season was very encouraging.”