Lewis Hamilton has confirmed that he will leave McLaren in order to race with Mercedes from next season after putting pen-to-paper on a three-year deal.
The move was confirmed on the Mercedes website on Friday morning, with Hamilton revealing how pleased he was to complete the move.
"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 AMG PETRONAS 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 decision will have huge repercussions around the world of Formula 1 as Michael Schumacher will be forced to leave Mercedes and it is unclear whether he will look for another team or go back into retirement.
"I have had three nice years with the team which unfortunately did not go as well as we all would have wanted on the sporting side," said Schumacher. "I wish Lewis well and for the team to achieve the success we worked so hard for in the build-up. I would like to thank the team for their trust and all the guys for their unconditional commitment. I will now concentrate on the next races."
McLaren have also moved quickly to find a replacement for Hamilton with Sauber driver Sergio Perez set to join their ranks for next season.
It still comes as a major blow for McLaren who have helped develop Hamilton since the age of 13 when they first became aware of the talent of the British driver.
The move had been rumoured for some time and it comes as a huge coup for Mercedes who have struggled in recent seasons since once again becoming a team owner after buying the Brawn team back in 2010.
Led by Ross Brawn they will be hoping that they can once again challenge for the drivers championship with Hamilton very much installed as the number one driver.
The 27-year-old former world champion will be partnered by German Nico Rosberg and is expected to be on a far larger salary, with the potential to earn far more through personal sponsorship and endorsements.
The Telegraph is reporting that Hamilton will sign a three-year deal in a move that could be worth as much as £61.6million.
In light of the new chassis and engine rules being introduced to Formula 1, it is believed that Brawn has promised Hamilton that the car will be more competitive.
"Looking ahead to 2013, 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 that Lewis shares our vision and ambition for the success of the Silver Arrow," said Brawn.
"I believe that the combination of Lewis and Nico will be the most dynamic and exciting pairing on the grid next year, and I am looking forward to what we can achieve together."
Hamilton will hope that working with Brawn, who has previously brought world titles to Benetton, Ferrari and Brawn GP, can ensure a new era of dominance for the Mercedes team.