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The deal for 2015-2016 will see 28-year-old again play for the Chiefs in the Super Rugby competition and push again for All Blacks honours.
Williams won the 2012 Super 15 title with the Chiefs before returning to rugby league where he won this year's NRL title with the Roosters. The Kiwis second rower will play for the Roosters next year before making a second switch to rugby.
Williams previously played for Canterbury in the ITM Cup, the Crusaders and Chiefs Super Rugby teams and the All Blacks from 2010 to 2012.
He has played 19 tests for the All Blacks, the last being against the Wallabies in Auckland last year.
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."
Chiefs coach Dave Rennie added: "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."
Tew said while the Chiefs would be the primary focus when he returns, Williams had also been open about his desire to push for a spot in the All Blacks Rugby World Cup squad in 2015 and to make himself available for selection in the All Blacks Sevens team as they push towards the Rio Olympics in 2016.
"We think it is great that he has made his aspirations clear and if he plays well enough to be considered for selection for those teams, then that is fantastic."