The 35-year-old Bracewell will join Finn Allen, Mark Chapman, Lockie Ferguson, Adam Milne and Tim Seifert as other players who have decided to take up a casual contract with the Black Caps.
Bracewell should be in the frame to be selected in New Zealand's squad for the five-match T20I series at home against India that starts later this month.
He said: "The backing from New Zealand Cricket for me to take this opportunity at this stage of my career means a lot. As a white-ball only player, this felt like too good of an opportunity to pass up.
"I'm still very much committed to the Black Caps and can't wait to be involved in the upcoming India tour and future white-ball series.
"I've also got my eyes firmly fixed on the opportunity to be involved in the inaugural NZ20 which is set to be introduced from next summer."
Nick Kelly, who has played eight ODIs and seven T20Is, has taken Bracewell's place and been handed a national contract.
New Zealand head coach Rob Walter said: "Nick's been a standout performer in domestic cricket for several seasons now and it's testament to his hard work that he's earned this first contract at this stage of his career.
"Introducing players like Nick to international cricket a bit later certainly has its advantages in terms of the player knowing their game and being able to trust themselves to perform under pressure.
"Nick stuck his hand up with his performances against Bangladesh and the West Indies in what was at times challenging batting conditions.
"He has more than 300 professional matches under his belt and is one of the best fielders in the country, so he adds a lot to our contracted group."
New Zealand have suffered a blow ahead of next month's home T20I series against India after spin-allrounder Rachin Ravindra was ruled out with a shoulder injury he picked up during a promotional shoot.
New Zealand allrounder Rachin Ravindra could be a doubt for next month's home T20I series against India after dislocating his right shoulder while doing a promotional shoot earlier this week.
New Zealand white-ball captain Mitchell Santner has declined a lucrative offer from Australian Big Bash League side Adeliade Strikers to remain in contention for Test selection.
New Zealand captain Tom Latham heaped praise on his squad for how they stuck to their guns and played "brave" cricket before completing a 2-1 Test series victory in England.
