The Silverstone-based team currently known as Racing Point (and previously Force India) will take on works status in 2021 after its owner, Canadian billionaire Lawrence Stroll, bought the famous British luxury car maker in January.
Vettel had not been offered a new contract by his current team, Ferrari, in the wake of his increasingly sub-par performances, especially when compared with new team-mate Charles Leclerc.
The 33-year-old German, who won all four of his titles early last decade with Red Bull, will race for Aston Martin alongside Lance Stroll, who is having an outstanding season and currently sitting fourth in the points standings.
Making way is Sergio Pérez, who has been at the team since 2014 and was instrumental in its survival when Force India looked set to fold midway through the 2018 season. The rumour mill says he could find refuge at Alfa Romeo or Haas.
Although this represents a step down the grid for Vettel, Racing Point has traditionally outperformed its budget. Its Mercedes-AMG-powered car is arguably 'the best of the rest' this season and, as per emergency pandemic-induced rules, must be used again next year.
Racing Point said: "The signing of Sebastian is a clear statement of the team’s ambition to establish itself as one of the most competitive names in the sport.
"As a four-time world champion, Sebastian brings a fresh mindset to the team. He's one of the most accomplished and respected drivers in world motorsport and knows what it takes to win at the highest level."
Vettel said: "I’m extremely proud to say that I will become an Aston Martin driver in 2021. It’s a new adventure for me with a truly legendary car company. I have been impressed with the results the team has achieved this year and I believe the future looks even brighter.
"The energy and commitment of Lawrence to the sport is inspiring and I believe we can build something very special together.
"I still have so much love for F1, and my only motivation is to race at the front of the grid. To do so with Aston Martin will be a huge privilege.”