Crotty, who's preparing to return from injury for the Crusaders' Super Rugby quarter final match against the Highlanders on Saturday, has also signed on with Canterbury for another year.
The 28-year-old has played 27 tests for the All Blacks, including the first test against the British and Irish Lions last month, and has played 119 Super Rugby games for the Crusaders.
Crotty admitted he considered overseas options but chose to stay in New Zealand.