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Highlanders coach Jamie Joseph will leave the Super Rugby franchise at the end of the season to become Japan's new rugby coach.

The 46-year-old former All Blacks forward, who also played nine times for the Brave Blossoms, led the Highlanders to the Super Rugby title last year.

He said in a statement the opportunity to step up to Test rugby was too good to refuse.

"The decision to move on from the Highlanders was the toughest decision I have ever had to make in my coaching career," Joseph said.

"The club, the players and the people I have worked with over the last five years mean a great deal to me and the thought of that coming to an end is tough.

"I take great pride in what this club and all the people within it have been able to achieve in a relatively short time.

"I will always be extremely grateful for the opportunity to have been involved with the club and, no matter which teams I am coaching in the future, the Highlanders will always hold a special place in my heart.

"In a coaching career though you have to keep looking for the next challenge, so you can grow and get better as a coach; for me the challenge of the next few years with Japan is what I need to keep moving forward.

"International rugby is completely different from coaching at Super Rugby level and brings with it a whole new set of challenges which I am keen to tackle.

"While I am looking forward to Japan, for now my focus is still with the Highlanders and ensuring we can build on last year's success."

Highlanders chief executive Roger Clark paid tribute to Joseph, and said the search for his replacement would begin as soon as possible.

"The timing of the announcement is not ideal but it clears up all the speculation of the last few weeks and I know Jamie well enough to know that he will continue to give everything he has to the Highlanders until that final whistle blows," Clark said.

"That's just who he is, so we have no concerns as a club on that front.

"Clearly in conjunction with the NZRU we will be mapping out a timeline for the appointment of a new head coach. It will be a thorough process and we will ensure the right person is appointed to lead the Highlanders through our next phase."