Ellis, who will play in his 150th Super Rugby match for the Crusaders on Friday against the New South Wales Waratahs, has played for the Steelers since 2014, returning to New Zealand for Super Rugby when his Japanese commitments end.
"It has been a privilege and an honour to represent the Crusaders for the past 10 years and, to be honest, I don't really want it to end," Ellis said in a statement.
"But I have thought my decision through carefully and it is really important to me that I finish on a high and while I am still loving it, so I know this is the right thing for me to do."
Ellis also played 28 tests for the All Blacks from 2006-2015, though his final two appearances in 2015 were more than three years since he last appeared for the side.
The 32-year-old was a regular in the All Blacks until the 2011 World Cup, when he performed the last act of the tournament by kicking a penalty into touch to end the game as New Zealand beat France 8-7 in the final.
Crusaders coach Todd Blackadder, who is also leaving the team at the end of the season, praised the influence Ellis had on the team during his 10-year Super Rugby career.
"He has been an important leader in this group for a number of years now and has really helped to shape this team," Blackadder said.
"We have been lucky to have a player of his calibre for 150 games and counting, and we will be very sorry to see him go.
"But there is no doubt he will leave a legacy here, particularly in the way he has helped to mentor and develop our younger players."
(Reporting by Greg Stutchbury; Editing by Peter Rutherford)
