The 26-year-old will leave New Zealand at the conclusion of the Super Rugby competition, ruling himself out of the inaugural expanded southern hemisphere championship involving test matches against South Africa, Australia and Argentina.
Williams would not say which NRL club he would join, though media in Australia and New Zealand have repeatedly said he had reached an agreement with the Sydney Roosters.
Williams, who infamously walked out on a five-year contract with the NRL's Canterbury Bulldogs in 2008 to switch codes and join French club Toulon, said he felt comfortable with the Waikato Chiefs but had "a handshake agreement" in place with an NRL club and wanted to honour that understanding.
"This is due to a handshake agreement made a few years ago before I even came back to New Zealand with an NRL club," Williams told a media conference in Hamilton.
"I haven't signed anything yet and I'm not in a position to elaborate on that (which NRL club he had agreed to join).
"I didn't think I would have loved it as much as I have back here. To be honest I kind of felt like I'd found my place at the Chiefs ... but it just goes back to (the fact) I've given someone my word and I've had to go on with it even though it was tough."
The New Zealand Rugby Union (NZRU) coaxed Williams home from Europe in 2010 and he made the All Blacks after a superb domestic championship with Canterbury.
He played one season with the Canterbury-based Crusaders in the southern hemisphere Super Rugby competition last year before crossing to the Waikato Chiefs this season.
The inside centre had been one of the form players of Super Rugby and had excelled in the All Blacks' test victories against Ireland last month.
"It is a shame and disappointing that New Zealand rugby is losing him," All Blacks coach Steve Hansen said in a statement.
"In talking to him, I know the decision has been a tough one but we fully respect why he has made this decision.
"He is an outstanding athlete who has stamped his mark on the game and hopefully this is not the last time we see him in New Zealand rugby."