World champion Fernando Alonso will join McLaren from Renault in 2007.
Alonso won the Formula One world championship with Renault in 2005
The Spaniard is contracted to Renault for next season but his move will oust either Kimi Raikkonen or Juan Pablo Montoya at McLaren.
The moves comes just days after McLaren signed a lucrative sponsorship deal with Vodafone.
"It's great that our strong belief in the strength and competitiveness of the package has been endorsed by the world champion," said team boss Ron Dennis.
"We always make it clear that we want to be the best and the only way of achieving this objective is by attracting the best people, the best drivers and the best sponsors."
Alonso became the youngest ever world champion - at 24 - and the first from Spain when he clinched the title in Brazil in September to end Michael Schumacher's five-year reign.
He said: "To become part of a team with such a desire to succeed and passion for performance is a dream come true for any Formula One driver.
"It will be a new beginning for me and a tremendous challenge and from what I have heard about this new exciting partnership there is something to look forward to.
"Obviously I will be sad to leave Renault but sometimes possibilities come along which are just too good to miss.
"I'm pleased that we are able to make this announcement now as it will allow my current team and I to focus 100% on defending the world championship next year."
Dennis has yet to decide which of his drivers will make way, though Raikkonen has been strongly linked with a move to Ferrari to replace Schumacher.
"We are in discussions with our current drivers regarding the 2007 season," Dennis said.
"Both Juan Pablo and Kimi are extremely talented, professional and competitive Formula One drivers and they will continue to concentrate on our joint challenge for the championship."
Rising Finnish star Heikki Kovalainen is likely to take Alonso's place at Renault. He was already due to test for Renault prior to a planned race seat in 2007.
Renault boss Patrick Faure said he was disappointed by Alonso's decision but stressed that the team's priority is the 2006 season.
"Fresh challenges are essential for any sportsman, and he has taken the decision to pursue a new direction in his career. That is part of Formula One, and part of life," said Faure.
"We aim to maintain our level of performance next year with an aggressive technical programme and competitive approach.
"Every member of the team is working 100% to produce a package that will allow both Fernando and Giancarlo Fisichella to defend the team's position as world champions. Our aim will be to win again in 2006."