The All Blacks captain has joined star flyhalf Dan Carter in signing a new contract which will prevent both of them taking up lucrative long-term offers to play abroad.
McCaw's four-year deal will allow him to take a break from the game or for the 30-year-old to take up a short-term overseas contract.
"I've always said that as long as I am enjoying playing footy in New Zealand then I will stay," said McCaw.
"I still have the hunger and desire to continue to play for the All Blacks and the (Canterbury) Crusaders, and there are still things I want to achieve as a player."
The New Zealand Rugby Union were delighted to keep both players out of the clutches of foreign clubs and with Canterbury.
NZRU chief executive Steve Tew said: "He (McCaw) is an inspiration both on and off the field and as our most-capped test captain and All Black, he will provide New Zealand rugby and the All Blacks with a very solid foundation to approach the next four years from 2012."
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