"But at the end of the day I love my life here in New Zealand with my family, friends and teammates and I'm not ready to give that up. I still feel blessed every time I pull on the jersey for the All Blacks, Crusaders or Magpies so I consider it an honour to be able to keep working hard to earn that right for the next three years," he added.
Dagg's re-commitment to New Zealand Rugby came days after his ABs teammate Ben Smith re-signed with New Zealand Rugby.
"To have a player of Israel's ability and versatility re-sign is a major lift for all levels of New Zealand Rugby," All Blacks head coach Steve Hansen said.
"We appreciate the decision 'Izzy' and his wife Daisy have made and to be able to plan the future, knowing that we'll have him involved makes life so much easier for us all, and we look forward to the challenges ahead.
"Having secured two key players back to back, I think it's important to again pay tribute to all the parties involved in the deal, including the Essentially Group and everyone at New Zealand Rugby. This is a massive achievement and their role in getting two big deals across the line should be recognised."
Magpies co-coach Craig Philpott was thrilled to hear Lindisfarne College old boy Dagg will continue to be a Magpie.
"Obviously we will only have him to play if he needs to recover from an injury or needs to prove his form as was the case before the last World Cup. But we're happy to have him because he is a great ambassador on or off the field. He is fantastic with our academy players and he is a proud Pirate," Philpott said referring to Dagg's Napier Pirate Rugby and Sports club which he played for in the 2011 Maddison Trophy final win against Havelock North.
Hawke's Bay Rugby Union CEO Mike Bishop was predictably delighted with Dagg's announcement. Dagg has played 50 first class games for the Bay.
"Israel's re-signing with New Zealand Rugby, the Crusaders and Hawke's Bay is tremendous news and demonstrates his commitment and passion for each of those organisations. His signing for Hawke's Bay until 2019 will mean he will be a 14- year Magpie, having made his debut in 2006. That places him alongside the greatest and longest-serving players to wear the famous black and white jersey."
All Black No 1101, Dagg, has played 61 tests for the All Blacks, and has scored 128 points (24 tries, one conversion, two penalties). He stormed onto the national rugby scene for Hawke's Bay at under 16 level, and became one of the few players to be selected for a provincial side while still in high school when he made the Magpies team.
He was selected for the Highlanders in 2009 and made his All Blacks debut against Ireland in June the following year, a week after his 22nd birthday. The Crusaders signed him in 2011 and he has played 74 games for them since. With his Crusaders and Highlanders caps combined, Dagg will mark 100 Super Rugby games the first time he takes the field for the Crusaders this season.