Giancarlo Fisichella is to partner Fernando Alonso at Renault next year.
Fisichella is returning to a team from which he was dropped in 2001
Fisichella has secured a two-year deal and will replace fellow Italian Jarno Trulli, who is expected to join Toyota.
Renault team boss Flavio Briatore said: "Since we last worked with Giancarlo in 2001, every aspect of his approach to the sport has changed.
"I am confident Giancarlo and Fernando are the drivers we need to achieve our goal of winning the world championship in the coming seasons."
Renault F1 president Patrick Faure said Fisichella had "shown a very impressive attacking approach in recent seasons.
"He has regularly surprised us with the quality of his performances, and his recent drives in particular have been very impressive.
"Furthermore, his approach to the sport has matured and he has made real progress since we last worked with him.
"Giancarlo will provide us with a very competitive blend of aggression, consistency and hard work."
Faure defended the decision not to re-sign Trulli, who is the only driver other than Michael Schumacher to win a race this season.
The Italian has quit the team because Briatore was making any new deal contingent upon the driver signing a personal management deal with him, BBC Sport understands.
Ferrari: M Schumacher, Barrichello
Renault: Alonso, Fisichella
BAR: Button, Sato*
Williams: Webber, ?
McLaren: Raikkonen, Montoya
Toyota: R Schumacher, Trulli*
* = to be confirmed
"We weighed up all the options, and went into a lot of detail, looking at lap-times in the races, in qualifying and many other factors," Faure said.
"Jarno has done an excellent job for Renault in the past three seasons. It was a hard choice, but it is our job to make those choices.
He shrugged off suggestions that the absence of Trulli, who is good friends with Alonso, would disrupt team harmony.
"There was a feeling that perhaps we needed a little more challenge within the team," Faure said.
"The harmony between our drivers was an undoubted asset in building the team as we have done over the past three years.
"But when you are at the top, you need to be more aggressive, we need to see a competitive edge between our drivers. That dynamic helps drive a team forward.
"Furthermore, I do not believe the harmony of the team will be affected in any major way."
Faure also denied that Renault had had to pay Sauber to release Fisichella, who was under contract to the Swiss team for 2005.
Fisichella, who is said to have been able to retain his own management team, has snubbed approaches from Williams in favour of Renault.
He and Alonso will make a strong driver line-up, combining youth, experience, speed and flair.
Williams, by contrast, are struggling after both their current drivers decided to leave, Juan Pablo Montoya for McLaren and Schumacher for Toyota.
They will have Mark Webber in one car, after the Australian's Jaguar team broke the worst kept secret in F1 on Wednesday by announcing he was to drive for Williams in 2005.
Webber is set for Williams - but who will join him?
The team had wanted to partner the Australian with Fisichella in a strong line-up that would have provided pace, experience, steel and flair.
But there are now few recognised experienced, front-line options for the team.
They have been linked with former world champion Jacques Villeneuve, who lost his drive at BAR at the end of last season, but a source has told BBC Sport that the Canadian is not an option.
And while Mika Hakkinen, who retired at the end of 2001, is understood to be considering a possible return, any move for the Finn would be a huge risk given that he quit the sport because he lacked the motivation to continue.
Williams have also been linked with German Jordan driver Nick Heidfeld, McLaren's David Coulthard, who was given his F1 debut by the team in 1994 and BAR test driver Anthony Davidson