The 30-year-old has put pen to paper on a new two-year deal.
Smith has been a mainstay in the national side since making his All Blacks debut in 2012, playing 82 tests - making him New Zealand's most capped number nine.
He's excited to confirm that his future would be in New Zealand.
"From my earliest playing days, my focus has always been about being passionate about the teams I play for and I've always enjoyed giving 100 percent to the teams I represent," Smith said.
"I love representing the Highlanders and the All Blacks and playing my rugby in New Zealand gives me the chance to continue to do that.
"I'm grateful to NZ Rugby and the Highlanders organisation for all the support they've given me over my career and for the opportunities they have provided for myself and Teagan, going forward."
New Zealand Rugby CEO Steve Tew has also expressed his delight in re-signing the All Blacks halfback through to 2021.
"He's a proven world-class player, the most capped All Blacks halfback ever and an incredibly important member of the All Blacks and Highlanders," Tew said.
"New Zealand Rugby has been working incredibly hard on the retention of our key players and, while it's inevitable that some will move on following the Rugby World Cup, we'll still have a core of experience in the All Blacks post 2019, and Aaron will be a key part of that group.
"We know all our players have choices to make on where they play their rugby and that the global environment is challenging, but we feel we have got one of the best environments for players here, with outstanding teams and coaches, and so we congratulate Aaron on his decision."
Smith joins a number of established All Blacks who have signed with New Zealand Rugby post 2019, including Dane Coles, Codie Taylor, Joe Moody, Ofa Tuungafasi, Scott Barrett, Sam Cane, Ardie Savea, TJ Perenara, Anton Lienert-Brown, Damian McKenzie and Rieko Ioane, with negotiations progressing with a number of other key players.