His recommitment means New Zealand Rugby and the Hurricanes can continue to rely on his outstanding leadership, skill and experience for the next three years.
The 2015 Rugby World Cup winner, who led the Hurricanes to the club's first Investec Super Rugby title a year later, said he was committed to continuing his career in New Zealand.
"I still feel like there are things that I want to achieve in New Zealand with teams that mean a lot to me," Coles said.
"Missing all of last year's Super Rugby season with injury made me realise just how much I missed being out there for the Hurricanes and I want more time in the jersey."
The 32-year-old has played 60 Tests for the All Blacks since making his debut against Scotland in 2012.
Coles' strength, mobility and speed helped to redefine the qualities required for a modern international front rower, with an ability to break through tackles and flat foot defenders that sets him apart.
In 2015, he cemented his place as the All Blacks first choice hooker and started in the Rugby World Cup final victory over Australia. Coles' status as a leader was also recognised when he was named as captain of the Hurricanes for the 2016 Investec Super Rugby season.
All Blacks Head Coach Steve Hansen welcomed Coles' recommitment.
"Dane is a valued member of the All Blacks group. He is an important leader on and off the field and passionate advocate for the game and the All Blacks. His is an important asset to any team he plays for and we're all very happy he has re-signed," Hansen said.
New Zealand Rugby Chief Executive Steve Tew said Coles is a trusted, and highly valued player on and off the field.
"Dane has become one of those influential players whose leadership sets an incredibly high standard in any team for which he plays.
"We know he still has his sights set on a few goals in New Zealand, and we are committed to helping him achieve those," he said.
A host of top-line All Blacks are set to move overseas after the Rugby World Cup and Coles was among those coming off contract. Ben Smith and Nehe Milner-Skudder have announced their departures, while All Blacks captain Kieran Read has said that this will be his final year in New Zealand. Ryan Crotty and Sonny Bill Williams are also off contract.
Coles played the last of his 100 Super Rugby games in the semifinal loss to the Lions in 2017, eight years after he made his debut. He is a fan favourite for the Hurricanes, where he regularly leads from the front.
Hurricanes Head Coach John Plumtree was delighted that Coles would continue to be part of the club moving forward.
"It's fantastic for everyone here that Dane will continue to lead us and be as influential as he is," he said.
"You can never under estimate just how much he has to offer with his experience and just how much respect he has within our squad and within our coaching group."