His move will see the 31-year-old Crusaders tighthead linking up at the Saints with brother Ben, already on Northampton's books.
Franks, who will be based outside of New Zealand for the first time in his career, is now set to end his Test career at this year's World Cup in Japan before joining the East Midlands club.
Franks has been capped 106 times by the All Blacks but New Zealand have a longstanding policy of not selecting overseas-based players for Test duty.
"The Crusaders, All Blacks and Canterbury Rugby have been a big part of my life, and my family's lives, for more than a decade now, and I'm grateful for every opportunity I've had to live my dream in those jerseys," Franks said in a NZR statement.
"New Zealand will always be home, but Northampton presents a great opportunity for me to test myself in a new rugby environment, and reconnect with family there," he added.
"While I know I'll look back at the end of my time in New Zealand with an immense amount of pride, I still have a lot I want to achieve this year and some big goals to tick off before I leave."
And in a statement issued by Northampton, Franks explained his reasons for moving to England by saying: "I've always taken a keen interest in northern hemisphere rugby so I'm looking forward to coming to the UK and proving myself, while the prospect of playing at Franklin's Gardens in front of Northampton's passionate supporters is hugely exciting for me and my family."
He also played in all three Tests of a dramatic drawn series against the British and Irish Lions in 2017, where future Saints team-mate Courtney Lawes was an opponent.
Meanwhile NZR chief executive Steve Tew said Franks "will leave our shores as an All Blacks legend" while head coach Steve Hansen added: "Owie is one of the most professional players I've had the privilege of coaching.
"The standards he sets for himself - and others - are exemplary."
Northampton are currently ninth in the 12-team Premiership but only six points adrift of the top four who will contest the title-deciding play-offs.
