Halai has scored 14 tries in 41 games for Wasps since arriving from Auckland Blues in January 2015.
The 29-year-old has started only seven times this season for the Premiership leaders, scoring two tries.
"Frank still has a big part to play for the club as we enter the business end of the season," director of rugby Dai Young told the club website.
"His game-time has been limited this season due to the form of Christian Wade and the development of Josh Bassett, as well as Willie Le Roux coming on board, so it's a really competitive area."
Wasps winger Frank Halai will join French Top 14 side Pau at the end of the Premiership season.