Wagner, who formerly trained at the Skating Club of Wilmington and is a two-time national champion at 22, will be joined in Sochi by 2014 champion Gracie Gold and 15-year-old runner-up Polina Edmonds.
Nagasu will be the first alternate. "I'm disappointed in the decision," she said in a statement released by U.S. Figure Skating. "Though I may not agree with it, I have to respect the decision the federation made."
Wagner's selection, just 13 hours after a performance she termed "embarrassing," was the focal point of a day in which 15 Americans - three women, two men, three ice-dance teams, and two pairs teams - were named.
In the three other disciplines, performance at these championships was rewarded.
Jeremy Abbott, 28, who won a fourth national title Sunday, and 19-year-old runner-up Jason Brown will represent the men.
The ice-dance contingent will include six-time national champions Meryl Davis and Charlie White, Olympic silver medalists in 2010; Madison Chock and Evan Bates; and Maia and Alex Shibutani.
In the pairs, Marissa Castelli and Simon Shnapir, and Felicia Zhang and Nathan Bartholomay are Sochi-bound. Bartholomay is from Newtown, Bucks County.
USFSA president Patricia St. Peter insisted that in choosing Wagner, the selection committee simply adhered to its guidelines.
"This competition," she said, "is not the only event that U.S. Figure Skating considers in selecting its team. . . . Looking at Ashley Wagner's record and performances, she's got the top credentials of any of our athletes."
Wagner, who spent an uneasy night fearing she might narrowly miss an Olympic appearance for the second straight time, got the good news via a text message as she watched warm-ups for the men's free skate.
"I was terrified that I was again going to be having regrets," she said, clutching a tear-soaked tissue. "I'm just so grateful that the federation was able to look past one poor skate."
Wagner admitted that she succumbed to nerves at nationals, both Saturday night and in 2010, when - in a year in which only two U.S. women were Olympic-eligible - she came in third.
Asked whether Olympic pressure wouldn't be even more intense, she said she didn't think so.
"It's a different type of pressure," Wagner said. "At nationals, the pressure was just overwhelming for me."
She fell in both her short and long programs and finished a distant 29 points behind Gold, eight behind Nagasu.
The committee also chose to go with Edmonds, the 2013 junior champion who will be making her initial international appearance as a senior skater at Sochi, in her mother's native Russia.
"How many girls get to say that their first major international event was the Olympics?" Wagner asked. "Not many."
According to the committee's guidelines, the results of nationals, while significant, can be supplemented by other factors.
In her defense, Wagner finished fifth in the most recent world championships and won the bronze medal in the Grand Prix Final. She had a first and second in two Grand Prix events and won at nationals last January.
Nagasu, 20, was third and eighth in two 2013 Grand Prix events and seventh at last year's nationals. But unlike Wagner, she has skated in an Olympics, finishing a surprising fourth - the best American finish - in Vancouver.
Sunday's announcement added another layer of controversy and confusion to a sport that, with its history of judging disputes and a complex new scoring system, has had its share of both.
Except for Davis and White, the defending world champions, the U.S. skaters will be long shots in Russia.
Among the women, traditionally an American strength, Wagner will need to add and improve on her jumps if she hopes to compete against a field dominated by Asian skaters.
Over the weekend, for example, she failed to land a triple-triple combination, which is essential for accumulating a medal-worthy point total.