Cal Crutchlow has signed a two-year deal to ride for Ducati from next year.
The deal gives Crutchlow, who has had four podium finishes for Yamaha's satellite team Tech 3 this year, a MotoGP factory ride for the first time.
The 27-year-old had sought a factory ride with Yamaha, who have replaced him with Spaniard Pol Espargaro, 22.
But the Briton joins Ducati, replacing 2006 world champion Nicky Hayden and re-forming his partnership with former Tech 3 team-mate Andrea Dovizioso.
The last British riders in a MotoGP factory team were Jeremy McWilliams and Shane Byrne, who raced with Aprilia Racing in 2004.
There are only three full factory teams in MotoGP - at Ducati, Yamaha and Repsol Honda - and each has two riders.
Both Jorge Lorenzo and Valentino Rossi have contracts with Yamaha that run until 2015, while Repsol Honda have Spaniards Marc Marquez and Dani Pedrosa signed up.
Riders at factory teams benefit from updates and higher spec machinery before their rivals in other outfits, who lease their bikes from the factories.
In May, Crutchlow revealed that Yamaha were in talks with Moto2 rider Espargaro for a Tech 3 ride in 2014.
With Bradley Smith under contract with the satellite team for 2014, it looked as though Crutchlow would be left without a ride in 2014.
Yamaha, though, were keen for the Isle of Man star, who has finished as the top satellite rider in all but two races this year, to stay with the Tech 3 team.
Yamaha Motor Racing managing director Lin Jarvis revealed ongoing talks with Crutchlow's management team as late as this week.
He told motogp.com: "Now is the time to make money in your career, so the main issue is that we are trying to see if we can put together an offer that is enough for him to stay."
Ducati have struggled in recent seasons and have not won a race since Casey Stoner took victory at the Australian Grand Prix in 2010.
Dovizioso finished fourth in the championship for Tech 3 last year, but has struggled to make his mark for Ducati. His best placing this season has been fourth.
Seven-time MotoGP champion Rossi had a two-year spell with Ducati but managed only three podiums, eventually rejoining Yamaha this year.
The Audi takeover of Ducati has prompted big changes in the managerial side of the MotoGP project, but they still remain without a single podium in 2013.
Ducati Corse general manager Bernhard Gobmeier talks of a two-year project to get Ducati back to a competitive level.