The former Black Caps skipper has played in the Indian Twenty20 competition since 2008.
Meanwhile Martin Guptil has been picked up by the Sunrisers Hyderabad for just over $200,000 and Lockie Ferguson has gone to the Kolkata Knight Riders for $320,000.
Guptill joins Kane Williamson at Hyderabad.
Other New Zealanders not picked up include Corey Anderson, Matt Henry, Jimy Neesham and Glenn Phillips.
Nine New Zealanders had already been retained by franchises including Williamson, Colin de Grandhomme, Tim Southee, Trent Boult and Colin Munro.
McCullum is about to start the new Big Bash season in Australia with the Brisbane Heat.
Seamer Jaydev Unadkat and mystery spinner Varun Chakravarthy were the big buys in today’s auction both going for more than $1.5 million.
The Rajasthan Royals bought back the 27-year-old Unadkat after letting the left-arm seamer go following this year’s tournament.
Kings XI Punjab, who are now coached by former Black Caps mentor Mike Hesson, paid the same amount to bag the services of uncapped spinner Chakravarthy, who only had a base price of 40 thousand dollars.
The 27-year-old started his career as a wicketkeeper-batsman, then took a break from the game to return as a seam-bowling all-rounder. A knee injury forced him to take to spin bowling, and he has only played one first-class game.
The 12th edition of the league will be played from 29 March to 19 May.