Almost 50% more children are taking part in sport and physical activity regularly than two years ago, says a new study.
Sport Wales' School Sport Survey also suggested boys were still more likely than girls to regularly join in sport.
The body spoke to 110,000 pupils from nearly 1,000 schools across Wales.
The number of children taking part in physical activity three times a week or more rose from 27% in 2011 to 40% in 2013.
Sport Wales is responsible for increasing participation and improving performance in sport in Wales.
Sport Wales chair Professor Laura McAllister said the figures showed sport and education were working together, and described the survey results as "encouraging".
She added: "They also help us understand how to encourage tomorrow's generation to participate more in sport and physical activity.
"But there are still challenges ahead and we need to build upon the success that we are creating uniquely in Wales.
"We risk losing the enormous gains made if we do not listen to the voice of our children.
"At a time of public austerity it is not a question of more money. It is about investing in our children's future through the health, education and sports sectors working better together to give our children the best start in life."
Earlier this year, a group led by Dame Tanni Grey-Thompson called for PE to be given the same status as maths and English.
The Welsh government said it would consider the recommendation.
Pembrokeshire badminton player Jordan Hart agreed that sport played a crucial part in her life.
She competed in the School Games 2012, and now the 18-year-old is bidding to qualify for next year's Commonwealth Games.
"I don't know really what I would have done if I hadn't chosen to do sport," said Ms Hart, who is now studying a sports degree at Loughborough University.
"Personally, I think everybody should be involved in some sort of sport.
"It's a major factor in people's lives and it has definitely improved my life. I think it is definitely a positive."
The results of the survey will give local authorities, education services and health boards detailed information to help boost the number of young people participating in sport and physical activity.
Sarah Powell, chief executive of Sport Wales, said the survey showed its efforts had made a difference.
"The work in primary and secondary schools funded by Sport Wales over the last 10 years, with after-school clubs and the wider sports community, has opened up opportunities for every child to try out a wider variety of sports and physical activities.
"These have been delivered in an enjoyable and fun environment, building children's confidence and interest to do more.
"The School Sport Survey results build on other evidence suggesting an increase in participation since the London 2012 Olympic and Paralympic Games - for instance sports club membership in Wales passed the 500,000 mark for the first time ever and there has been a big rise in disability sport opportunities.
"Although London 2012 was a point of inspiration, we need to sustain growth in sports participation through better understanding of young people and by delivering services they want."
The chair of Abertawe Bro Morgannwg University Health Board, Andrew Davies, said he was very encouraged by the level of involvement in sport by young people in Neath Port Talbot and Swansea.
"These latest figures give us a sound foundation on which to help individual well-being and build healthier communities," he said.