Knights, 24, put off contract talks until the end of the season and weighed up “substantial” offers from several Melbourne-based clubs, before agreeing to commit to the Crows on Thursday.
The left-footer made his decision while on holiday in Bali and said he was happy to stay at West Lakes.
“I’m pleased it has all been sorted out,” Knights said.
“I was keen to continue to be a part of the Adelaide Football Club. I can see success on the horizon, I love the environment and I’ve made close friends in the club.”
Knights enjoyed a break-out season in 2009, kicking 43 goals as a half-forward, but was limited to just five games this year through injury.
Adelaide football manager Phil Harper said he was confident Knights had overcome a nagging foot complaint and would be an important part of the team in future.
“The club is extremely pleased to have Chris re-commit despite substantial offers to return home to Melbourne. He is a key player for our team and plays the very difficult half-forward role as well as anyone in the competition,” Harper said.
“He is injury-free now and we are confident of a big year from Chris in 2011.”
Knights was the last big-name player on Adelaide’s uncontracted list, with the club having already re-signed Scott Thompson, Patrick Dangerfield, Richard Douglas and David Mackay.
Defender Nathan Bock, who was also out of contract, has joined Gold Coast, while ruckman Jon Griffin has requested a trade home to Western Australia.
Emerging players Rory Sloane, Jared Petrenko, Brodie Martin and Ricky Henderson have all signed new deals with the club.
