Hansen, who has helped bring unprecedented success to the All Blacks, had indicated after their successful World Cup defence in England last year that he would probably walk away after his original contract expired at the end of 2017.
However, he appeared to have had a change of heart this year and dropped hints that he could decide to stay on after the British and Irish Lions tour in 2017.
Hansen said on Monday he had finalised his decision after talking it over with his family and New Zealand Rugby (NZR), and gauging the support of senior players.
"It's not a decision that was made easily or lightly," Hansen told reporters in Wellington. "I had to be certain, but having got the feedback from management and the players that they wanted me to continue ... it was a no brainer.
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"It's the best job going. I love what the All Blacks are, the history that comes with them and the legacy they have created. I just love being a part of it.
"There is a challenge to go through to 2019 and go for three (World Cups) in a row because it has never been done before and it's a real challenge for this team and one they want to get up for."
The 57-year-old has been involved with the team since becoming an assistant to Graham Henry in 2004 and took the top job following the successful World Cup campaign at home in 2011.
The All Blacks, who open their Rugby Championship campaign on Aug. 20 against the Wallabies in Sydney, have had unprecedented success since Hansen took over, compiling a record of 52 wins, three losses and two draws.
They also became the first team to win successive World Cup titles in England last October, but several veterans ended their international careers afterwards and pundits believed the team might be vulnerable this year.
However, they completed a 3-0 series sweep of Six Nations runners-up Wales in June and Hansen said while that result had reignited his enthusiasm he had only made up his mind to continue "in the last week".
Hansen's decision was likely to help players make up their minds about their immediate futures, NZR Chief Executive Steve Tew said. Only seven have committed to the organisation through 2019.
"We have got some pretty intelligent senior players and they're making some long-term decisions as well," Tew said,
"What Steve was doing was part of those discussions."
(Editing by Peter Rutherford)
