The Brit replaces Michael Schumacher — whose second retirement from F1 will be confirmed by the German car giant at its Stuttgart HQ later today.
Hamilton said: “It is now time for me to take on a fresh challenge and I am very excited to begin a new chapter racing for the Mercedes Formula One Team.
“Mercedes-Benz has such an incredible heritage in motorsport, along with a passion for winning, which I share.
“Together, we can grow and rise to this new challenge. I believe that I can help steer the Silver Arrows to the top and achieve our joint ambitions of winning the world championships.”
The 27-year-old will link up with boss Ross Brawn, who guided Schuey to seven world titles and was also behind Jenson Button’s 2009 world crown.
Brawn said: “I am delighted to welcome Lewis Hamilton to our team.
“The arrival of a driver of Lewis’ calibre is a testament to the standing of Mercedes-Benz in Formula One and I am proud Lewis shares our vision and ambition for the success of the Silver Arrows.
“I believe the combination of Lewis and Nico (Rosberg) will be the most dynamic and exciting pairing on the grid next year and I am looking forward to what we can achieve together.”
McLaren this morning confirmed Mexican Sergio Perez will replace Hamilton on a “multi-year deal”.
Perez said: “I’m thrilled and delighted to have become a McLaren driver.
“The McLaren name is one of the greatest in the history of Formula One.”
McLaren chief Martin Whitmarsh added: “Uniting Sergio alongside Jenson will give us a very broad base of driver ability.
“Jenson is one of motorsport’s greatest ambassadors and his unique blend of prodigious speed and canny race-craft makes him formidably well-armed to fight for victory on any grand prix circuit in the world.
“While Sergio is still developing his palette of skills, we’re convinced that he’s not only talented and quick, but also that he’s willing and eager to learn.”
Hamilton ends a 14-year partnership with his boyhood team after rejecting a £36m deal.
The Monaco-based star will earn around £15m a year over the next three years with Mercedes.
But bonuses for wins and championships could take that to £60m and also allow Hamilton to sign personal sponsorship deals that may swell his earnings to £100m.
The news will end months of speculation over the future of the 2008 world champion.
Hamilton is hopeful the switch will boost his chances of adding to his one drivers’ crown.
He has become frustrated at missing out in the past few years with the team that had backed him since he was 13.
Schumacher, 42, has struggled since returning to the sport in 2010 and has decided to finally quit.
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