The 30-year-old Cruden, will return home from France after signing a one-year deal with the Chiefs.
Head Coach Warren Gatland suggested the first five-eighth would slot into the first-choice playmaking role, potentially leaving game-breaking All Black Damian McKenzie to be restored as the team's fullback.
McKenzie shone at five-eighth for the Chiefs in 2018 but a serious early-season knee injury ruined this year's campaign and robbed him of World Cup selection.
"It is great to have Aaron back to re-join the Gallagher Chiefs. As a player he has a proven ability to create opportunities with his boot and can spark up an attack from anywhere on the park. We are fortunate and privileged to have him return and I will look forward to coaching him in the coming season," Gatland said.
While a season of Super Rugby would make Cruden eligible to add to his 50 Tests for New Zealand, his subsequent Japanese contract appears set to discount any prospect of an international return.
Chiefs Rugby Club CEO Michael Collins said he knew the announcement would be popular with members, fans and the team.
"Aaron is an exceptional player and has been a fantastic leader for our team having co-captained the Gallagher Chiefs for four seasons. He is a great team man who brings a wealth of experience and is greatly valued by his teammates. We are rapt he is returning to the Club and we will value the contribution he will make both on and off the field," Collins said.
Cruden was pleased to be returning to the Chiefs before taking up his contract with Japanese Top League club Kobe Kobelco Steelers.
"It is a huge privilege to be a part of the Gallagher Chiefs once again. It is a fantastic environment to be a part of, which made it an easy decision to choose to return for the 2020 season. I'm looking forward to getting back and stuck into pre-season training with the guys," Cruden said.
Cruden made his debut for the Chiefs against the Highlanders in 2012, two years after his Super Rugby and All Black debut in 2010.
He scored 322 Test points but for much of his international career played in the shadow of All Blacks great Dan Carter.
The first five-eighth was a key figure in the Chiefs' back-to-back Investec Super Rugby titles in 2012 and 2013.
Prior to his departure in 2017 to French club Montpellier, Cruden co-captained the Chiefs alongside current co-captain Sam Cane.