Wagstaffe came through the ranks at City, but he made his name at Molineux, spending 12 years at the club.
He made 324 league appearances for Wolves and helped them beat his former club City to win the League Cup in 1974.
He also played in the 1972 UEFA Cup final defeat to Tottenham.
He left Wolves in 1976 to begin the first of two spells at Blackburn, during which he became the first player in English football to receive a red card.
His two stints at Ewood Park sandwiched one season with Blackpool before he hung up his boots in 1981.
"Everyone at Wolves was desperately saddened to hear of Dave's passing this afternoon," Wolves chief executive Jez Moxey told the club website.
"Our sincere condolences go to Dave's partner Val, their children, Gary, Mandy and Scott, and Dave's wider family.
"Everybody at the club and supporters will get the chance to join together to pay tribute to Dave ahead of our game with Gillingham on Saturday."
Source: PA
Source: PA