The deal comes despite a recent assault charge for the 25-year-old, which resulted in a warning from a Hamilton court and a sanction from the NZRU.
Sivivatu, who has earned 12 All Blacks caps since debuting against his native Fiji in 2005, said: "I'm really proud to wear the All Blacks jersey and to be part of the NZ Rugby family and I'm looking forward to my rugby at all levels in 2008 and beyond.
"There were some big offers from overseas but there was also a very respectful negotiation between the NZRU and Inside Running who represent me, and that made the decision a lot easier."
NZRU deputy CEO Steve Tew was also pleased with the winger's decision and said: "Sitiveni is a great talent and his decision demonstrates his commitment New Zealand rugby. It also highlights the value of the black jersey.
"This is a good outcome not only for the All Blacks but also for Waikato and the Chiefs where he has made a significant impact in recent seasons."
Waikato Rugby Union Chief Executive Gary Dawson added: "Sitiveni is a world-class rugby player. To have a player of his calibre and experience remain in New Zealand, and in particular the Waikato province and Chiefs region, is a positive for our teams and supporters."