It capped a magnificent season for Coyte who claimed 30 wickets in the competition.
Overall, Coyte has been involved in nine WNCL titles, the first six of them coming for NSW between 2009-10 and 2014-15 after she debuted as an 18-year-old.
Her return to NSW will add experience to what is a relatively young bowling attack as they look to improve on last season’s return of four wins in 12 matches which saw them finish sixth.
“Sarah has been a very consistent, very successful player for a long, long time and it is exciting to see her come back to NSW,” Gavan Twining, the NSW head coach, said.
“We have a pretty young bowling attack, even though a lot of our young players have played at a high level, and Sarah will provide further leadership to that group.
“As well as being a fantastic player, she is just a wonderful person and that is always a positive to bring into any group striving for success.”
Coyte played for Australia 81 times across all three formats between 2010 and 2016.
The full NSW list will be confirmed this week.