Let M be a CR submanifold of a complex manifold X. The main result of this article is to show that CR-hypoellipticity at p(0) is an element of M is necessary and sufficient for holomorphic extension of all germs at pc, of CR functions on M to an ambient neighborhood of p(0) in X. As an application, we obtain that CR-hypoellipticity implies the existence of global generic embeddings and prove holomorphic extension for a large class of CR manifolds satisfying a higher order Levi pseudoconcavity condition. We also obtain results on the relationship of holomorphic wedge-extension and the C-infinity-wave front set for CR distributions.