Fans took to the Chiefs Facebook page with comments such as "sweet!!!" and "mean as!" and "awesome work!" being posted.
Williams played in midfield and on the wing for the All Blacks during the World Cup, and his versatility earned him a place on the bench for the final against France.
"We're delighted that Sonny has chosen to continue playing his rugby in New Zealand next year," union general manager of professional rugby Neil Sorenson said.
Williams was a star player in Australia's National Rugby League before quitting in 2008 to play rugby for the French club, Toulon.
He remained in France until signing to play in New Zealand in 2010, joining the Crusaders.
In deciding yesterday to re-sign with New Zealand, Williams turned down potentially more lucrative offers from French rugby clubs and Australian rugby league teams.
The deal allows him to continue to develop his career as a professional boxer.