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."

The Dow Jones rose 150.52 points or 0.73% to 20,701.50, while the wider S&P 500 index added 17 points, also a gain of 0.73%, to 2,358.57.
The tech-heavy Nasdaq index climbed 35 points, or 0.60% to 5,875.14.
Financial and energy shares did particularly well.
Other newly released data showed the trade deficit in goods narrowed sharply in February and there were more increases in house prices in January.
These figures "underscore what has been going on really in this whole rally, and that is that confidence is pretty high and optimism is high and that has kind of been underpinning the resiliency of the equity markets," said Jim Davis, regional investment manager at US Bank Wealth Management.
Earlier in the day, investors had been hoping for hints about the timing of the next rise in US interest rates from Federal Reserve head Janet Yellen, who was speaking at a conference in Washington. In the event she made no mention of monetary policy.
Among individual stocks, electric carmaker Tesla rose 2.7% after Chinese tech giant Tencent spent $1.8bn buying a 5% stake in the company.
General Motors rose 2.4% after activist investor David Einhorn's Greenlight Capital called on the car giant to split its stock into two classes. He is also calling for four new directors to be appointed by GM. The company has rejected his proposals.
Shares in Amazon added 1.1% after the company said it had agreed to buy Middle East online retailer Souq.com.
Welsh pupils' exam performance continued to improve this year, official data has suggested.
[NEXT_CONCEPT]
(Close): The three main US stock indexes ended the day markedly higher on Tuesday as new figures showed consumer confidence hitting its highest level for more than 16 years in March.