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Fullback Israel Dagg has announced his retirement from rugby after his brilliant All Blacks career was cruelled by a long-term knee injury.

Former All Blacks fullback Israel Dagg has called time on an ongoing battle with injury and announced his retirement from all rugby.

One of the most eye-catching players of his generation, Dagg spent the latter part of his career fighting a knee problem that hasn't allowed him to play for the Crusaders, let alone add to his 66 Test caps.

While disappointed to step away, Dagg was grateful his All Blacks career fell during a period of enormous success, from 2010-17.

Blessed with electric pace and elusive running, Dagg burst onto the international stage with a series of spectacular tries.

His form was so compelling, he replaced centurion Mils Muliaina as the starting fullback midway through the victorious 2011 World Cup campaign in New Zealand.

When injuries slowed him, Dagg adapted his game, honing his aerial skills to an elite level and developing one of the game's longest punts.

New Zealand Rugby chief executive Steve Tew said Dagg's running will be the abiding memory for most fans.

"He leaves us as one of the greats of our game and the second most capped All Blacks fullback of all time," Tew said.

"He was an excitement machine on the rugby field and fans knew that when he got the ball in his hands that anything could happen."

Crusaders coach Scott Robertson said Dagg's contribution had continued off the field in recent seasons, helping mentor some of the exciting backline talent that had kept the Super Rugby champions ahead of their rivals.