Lewis Hamilton will end his 14-year association with McLaren at the end of the season and join Mercedes.
Hamilton will sign a three-year deal with the German manufacturing giant, worth a reported £15million a year.
McLaren have confirmed the signing of Sergio Perez to a multi-year deal from the start of next season as replacement for Hamilton.
The big question now, which has still to be answered, surrounds the future of seven-times champion Michael Schumacher.
Hamilton will partner close friend Nico Rosberg at Mercedes, leaving Schumacher out in the cold, but with the prospect of staying on as a brand ambassador for the team.
With Hamilton`s move sparking a domino effect there is a possibility 43-year-old Schumacher could yet join another team, but it is likely he will retire for a second time.
As for Hamilton, it is now clear he is to cut his ties with McLaren. Hamilton has spent the last few weeks agonising over the decision, having signed for the team at the age of 13.
Without doubt Hamilton`s move is a gamble, especially given his long-stated ambition to win multiple world titles. But with only one in five years at McLaren - likely to be six - and that back in 2008, he must now feel a change is required.
For McLaren, losing their big-name star will hurt, but in Perez they are recruiting a potential future world champion.
The 22-year-old, still a member of Ferrari`s young driver academy, said: "I`m thrilled and delighted to have become a McLaren driver."