GP2 champion Romain Grosjean will drive for Renault, who will become Lotus in 2012, alongside returning 2007 world champion Kimi Raikkonen next season.
Grosjean, 25, raced seven times for Renault in 2009 but failed to impress alongside team-mate Fernando Alonso.
"There's a big grin on my face at the prospect of getting behind the wheel of next year's car," said Grosjean.
The team's current line-up of Vitaly Petrov and Bruno Senna are currently without a drive for 2012.
"To be racing alongside a former world champion and someone who is hungry and returning to Formula 1 will be a great experience, and I'm sure will help raise my level of performance too," added Grosjean.
"I feel that my successful season in GP2 Series has helped me mature a lot, and I am a much more complete driver than I was last time I was competing in this sport.
"Returning to Enstone [Renault's base] as a race driver feels like coming home. I will not disappoint."
Raikkonen, who had talks with Williams about a return to F1 next season before signing for Renault last month, was drafted in to replace the team's number one driver Robert Kubica after the Pole failed to recover in time from serious injuries sustained in a rally accident in February.
Petrov, Senna and the team's reserve driver Grosjean, who was born in Geneva but has dual French and Swiss nationality, were all in the frame to take the second seat.
Grosjean impressed in this season's GP2 Series, the feeder championship to F1, taking five wins and 10 podiums on his way to a maiden title.
The 25-year-old then got behind the wheel of a Renault in the first practice sessions at the final two races of the season in Abu Dhabi and Brazil where he impressed team principal Eric Boullier.
"Romain has shown a lot of maturity in the past 12 months both through his GP2 Series victory and his development as third driver with us," said Boullier, who has pushed for Grosjean to be given a second chance following his low-key F1 debut.
"We were impressed when he drove for us in the first practice sessions in Abu Dhabi and Brazil.
"We are confident that drafting him into one of our driver's seats will help us in our rebuilding process.
"I would like to thank Vitaly Petrov and Bruno Senna for their contribution to the team's performance this year and I wish them all the best for the future."
