Welsh Government statistics showed that 60.2% of Year 11 pupils achieved five A* to C GCSE or equivalent passes including Maths and first language English or Welsh.
This compared to 57.9% of pupils achieving this threshold in 2014-15.
The Welsh Government said learners continued to improve with attainment again at record levels.
Education Secretary Kirsty Williams said government grants for the most deprived pupils had helped narrow the gap in performance between poorer pupils and their peers.
But changes to the way the data is measured means comparisons with previous years are more difficult.
Independent schools are no longer included in the figures in this latest annual report taken from exam bodies.
The attainment gap between pupils who are eligible for school meals - and those who are not - has narrowed for the second year in a row and now stands at 31.2%.
Ms Williams said the "commendable set of results" recognised the efforts of pupils, teachers and parents in Wales.
She said the pupil deprivation grant - introduced in 2012 and now an extra Â£1,150 for schools for each pupil from a disadvantaged background - was "making a real difference to the lives of these children".
Ms Williams added: "We are starting to break the link between poverty and attainment that has dogged our education system.
"While this is good news, there is still a lot more that we need to do.  That is why I recently announced my intention to double the Early Years Pupil Deprivation Grant, concentrating extra resources on our youngest pupils."
Rob Williams, director of policy with the head teachers' union, NAHT Cymru, said it was important to keep focusing on the youngest children.
"When school leaders, teachers and support staff are equipped with adequate resources to work proactively with pupils and their families, it is clear what can be achieved," he said.
"It is also clear that a consistent policy, left in place for long enough for schools to make it work, reaps rewards."
Welsh pupils' exam performance continued to improve this year, official data has suggested.