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Ellison played four tests for the All Blacks between 2009 and 2012, while his silky skills and utility value impressed during his time with Wellington, the Hurricanes and Highlanders. He also represented New Zealand Maori and won a gold medal with the NZ Sevens team in 2006.
The 37-year-old will fill the fifth Crusaders coaching position vacated by former Welsh wing Mark Jones, assisting with team defence and position-specific player development.
After three years with the Melbourne Rebels, Ellison first made the transition in a player-coach role in the Japanese Top League with Kurita Water Gush, and he was then part of the Wellington Lions coaching group for the 2020 provincial season.
"This is a really exciting opportunity for me to coach at Super Rugby level, as part of a world-renowned team that is full of talented players and coaches," he said.
"I look forward to meeting everyone, and sharing some of my experiences as a player both here in New Zealand and overseas. I have no doubt I'll learn a lot in this Crusaders environment and I can't wait for the challenge ahead."
Crusaders chief executive Colin Mansbridge said: "Tamati is a good man with a great reputation, and we look forward to his contribution to both our coaching group, as well as our wider organisation, in 2021. "He has connections to our region already through his iwi, Ngāi Tahu, and we are thrilled to welcome him to Rugby Park today, as the squad continues their pre-season preparations."
Crusaders coach Scott Robertson added: "Tamati is well-respected on and off the field, and we're excited to have him add his expertise to our coaching group this season. "He's a man with a lot of mana, and I know he'll make a significant contribution, sharing the experiences he had throughout a long playing career as he makes the transition to coaching."