Sagan (BORA-hansgrohe) was the main international drawcard at this year's race and he didn't disappoint, winning the People's Choice Classic and then stage four.
Confirming Sagan is a significant boost for the Adelaide race, which opens the World Tour calendar. It gives race director Mike Turtur a handy bargaining chip as he tries to entice other big names to the 10-20 January race.
Turtur can point to Sagan's exceptional season, which has featured three Tour de France stage wins and his sixth green jersey. Sagan also won the Paris-Roubaix monument for the first time.
"Peter Sagan is a gentleman of the sport and the most popular cyclist in the world," Turtur said.
"This year not only did we have the honour of having the rainbow jersey (as world champion) at the race but we saw him in the rainbow stripes win twice.
"He's had a good year so he knows that starting here in Australia is beneficial as clearly, he likes to hit the ground running."
Sagan made his professional debut in the Tour in 2010.