Williams, who will continue in rugby league with the Sydney Roosters in 2014, has signed a two-year deal, meaning he could appear for the All Blacks at the 2015 World Cup.
He will return to the Chiefs, for whom he played in 2012, in the Super 15 competition.
New Zealand Rugby CEO Steve Tew said: "Sonny showed in his two years with New Zealand rugby that he is an outstanding talent and was a real asset to our game.
"We are delighted to have agreed terms which will see him return to rugby in 2015."
Williams won the World Cup with New Zealand in 2011 on home soil even though he had been available to play for the All Blacks for less than a year.
He originally started out in rugby league, winning the NRL with the Bulldogs in 2004.
But he missed out on the 2008 World Cup because he moved to Toulon to play in the French Top 14, a decision that saw him pick up the moniker: "Money Bill".
He returned to New Zealand in 2010 after signing a contract with New Zealand Rugby and played for Canterbury in the ITM Cup and Crusaders in the Super Rugby competition.
In 2012 he joined the Chiefs and went on to win the Super 15.
But he then opted to return to league and joined Sydney Roosters, winning another NRL, before bidding to become the first person to win a World Cup in both rugby codes.
That dream died in Manchester, England, last month when the Kiwis were crushed 34-2 by Australia in the final.
He had already committed to a second straight season with the Roosters but has now decided to go back to union in 2015.
Chiefs Coach Dave Rennie said: "We're rapt. We made no secret that we were keen to get Sonny back in a Chiefs jersey. He's not only a quality player but adds huge value to our environment off the field."
Williams played 19 Tests for the All Blacks and also won the New Zealand heavyweight belt while boxing during his off-seasons, although he was stripped of the crown last week due to inactivity.
His last fight was a controversial 10-round points victory against former world title challenger Francois Botha of South Africa in February.