The Kiwi left-arm fast bowler will be available to play for the Red Rose from the beginning of the 2016 campaign and will feature primarily in the County Championship as Lancashire return to Division One this summer.
Since making his international debut in 2012 against the West Indies, the 29 year-old has taken 67 wickets from just 18 Tests at an average of 33.34 and is also in the first class record books after taking five wickets in one six-ball over for Otago against Wellington in April 2011.
Wagner has an excellent first class record with 431 wickets taken at an average of 27 from 104 games played.
Wagner, Pretoria born, started his cricketing career in South Africa where he made his first class debut for Northerns in 2005-06 and currently plays for Otago in New Zealand.
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The Kiwi bowler also played for Northants Cricket for a short spell in 2014 in Division One of the County Championship.
Cricket director and head coach Ashley Giles said: “We are delighted to have brought in Neil Wagner to strengthen our bowling attack.
“Neil is a world class bowler with a tremendous pedigree and having him available for such an extended period will give our County Championship Division One campaign a real boost.
“I am looking forward to him adding some additional quality to our squad.”
Wagner added: “I am extremely excited to play for such a great club. I have always admired Lancashire, ever since playing in the Liverpool Lancashire league for Ormskirk in 2008.
“I’m very much looking forward to joining up with the squad and working with Ashley and the rest of the team.
“I hope my contributions will help Lancs to win some silverware to sit in the cabinet at Old Trafford.”