The former All Black ended his 10-year stint with the Crusaders in 2019 to play his rugby for Kubota Spears in Japan.
Crotty, 35, trained with the Crusaders in the latter part of their 2023 campaign and played nine games for Canterbury in the NPC.
He said, "I have so much love for this team; it's hard to put into words how much it means to me.
"Japan was a great experience, but it felt like time to come home. Young family life, it's so precious to spend more time with the kids. They didn't travel with me to Japan for that last season, so I'm grateful to be here.
"Christchurch and the Crusaders are home for me, and I'm excited to reconnect with some special friends."
New Crusaders coach Rob Penney said Crotty would play an essential part in their season.
"He decided the coals were still burning for another campaign, and we were enthusiastic about him coming back into camp.
"His knowledge, his experience, his passion for this place – it's boundless.
"He's been a cornerstone of this place for a long time, helped to form the culture we have here, and is a leader both on and off the field."
Crotty follows Northland and former Chiefs first five-eighths Rivez Reihana, 23, in signing for 2024.
Crusaders backs coach James Marshall said they had been watching Reihana since his debut with the Chiefs and Northland in 2021. He earlier made his first-class debut for Waikato in 2019.
"He's impressed for Northland this season and his game-driving and leadership has really grown. He has a high-quality skillset and I'm looking forward to seeing him take his opportunities."
Reihana, another product from the St Kentigern College system, said he was ready to work. He played for New Zealand Schools in 2017 and 2018 and alongside Crusaders Fergus Burke and Dallas McLeod in the All Blacks Under-20 side in 2019.
"I'm pretty excited about the opportunity to come down and learn from the best."
He said he had been in touch with Marshall through the Bunnings Warehouse NPC, and their talks escalated toward the end of the season.
"I've had some good chats with a few of the boys, Jack Goodhue and some others, and they reinforced the choice for me. The Crusaders are a pretty special team and I'm ready to get stuck in."
Penney said, "Off the back of a couple of accomplished NPC campaigns, we were thrilled to bring Rivez into camp here at the Crusaders.
"He has a good level of depth and experience in Super environments and is an all-round, capable footballer.
"He fits the profile of what we need here."