Hansen was appointed head coach after Graham Henry stepped down following the team's victorious World Cup campaign in 2011 and the 53-year-old will now have a chance to lead the defence of the title in England.
The former Wales coach and assistant to Henry with the All Blacks since 2004 was initially given a two-year contract until the end of 2013.
"When I took this job I never took it as my right to get an extended contract and I feel privileged to have that opportunity," Hansen said.
"Going forward there are some massive challenges and I guess the biggest one is to recapture the William Webb Ellis trophy in 2015.
"In this role I have always been duty bound to do what is best for the team ... whilst it's great to be re-contracted I don't think it will have any influence on the future."
In his first season in charge, the All Blacks won 12 games, drew once against Australia and lost just one match, against England at Twickenham in their final Test of the year.
"I think he had an outstanding year last year as head coach," NZRU chief executive Steve Tew said. "We overcame a potential World Cup hangover with considerable expertise."
One of Hansen's biggest successes was laying the foundations for rebuilding the team to defend the World Cup by introducing nine new caps.
His team, which at one stage extended New Zealand's winning streak to 16 Tests, also played a thrilling up-tempo style, keeping the ball alive and spreading it back and forth across the field.
Hansen's next challenges will be deciding when to bring in other younger players catching the eye in Super Rugby and whether to jettison stalwarts who are not playing to their normal high standards.
He will also be expected to plug gaps left in the wider playing group by the likes of loose forward Adam Thomson and lock Anthony Boric, who are heading overseas at the end of the year.
Richard Kahui's decision to head to Japan has also created an issue for Hansen at centre with Conrad Smith looking to take a break from international rugby this year and Tamati Ellison coming back from a shoulder reconstruction.
Inside centre could also prove a problem with Ma'a Nonu suffering a slump in form at the Otago Highlanders, while Sonny Bill Williams has moved to rugby league.
With a three-Test series against France in June followed by the Rugby Championship title defence to come this year, he will also need to take a close look at hooker with Keven Mealamu and Andrew Hore both now aged 34.
While Mealamu has said he would like to still be in contention for the World Cup, Hansen will be looking to young contenders Dane Coles and Hika Elliott to make a concerted push for the Test spot.
"It has been well publicised that we have an aging leadership group," Hansen added. "Some of them are not going to make it (to 2015) ... so we have to make sure we get our balance in selections and planning right.
"The million dollar question is when you do it. We have to do our due diligence and make sure that we have the processes right when we make the decision."