diff --git a/frame/contracts/src/wasm/prepare.rs b/frame/contracts/src/wasm/prepare.rs
index 7deccdde7a069..8cd49bd9a199e 100644
--- a/frame/contracts/src/wasm/prepare.rs
+++ b/frame/contracts/src/wasm/prepare.rs
@@ -64,7 +64,7 @@ impl LoadedModule {
 		config
 			.wasm_multi_value(false)
 			.wasm_mutable_global(false)
-			.wasm_sign_extension(false)
+			.wasm_sign_extension(true)
 			.wasm_bulk_memory(false)
 			.wasm_reference_types(false)
 			.wasm_tail_call(false)
@@ -674,6 +674,22 @@ mod tests {
 			Ok(_)
 		);
 
+		prepare_test!(
+			signed_extension_works,
+			r#"
+			(module
+				(import "env" "memory" (memory 1 1))
+				(func (export "deploy"))
+				(func (export "call"))
+				(func (param i32) (result i32)
+					local.get 0
+					i32.extend8_s
+				)
+			)
+			"#,
+			Ok(_)
+		);
+
 		prepare_test!(
 			omit_memory,
 			r#"