Marco Melandri will ride the next two seasons for Ducati alongside current MotoGP standings leader Casey Stoner, Ducati team manager Livio Suppo announced after the USA Grand Prix.
"With Stoner and Melandri we will have two young, strong riders and we are very happy to have them aboard," Suppo added.
Melandri is 24 years old while his future Australian teammate is 21.
Stoner has already renewed his contract with Ducati through 2009 with an option to ride again in 2010.
Melandri will be the first Italian to ride for Ducati since it returned to Grand Prix racing in 2003.
The Bologna-based team previously had its sights on five-time premier class champion Valentino Rossi, who moved from Honda to Yamaha in 2004 and has remained there since.
On learning of Melandri's move, Rossi said "It's going to be great for Italy and Italians, and seeing how Ducati has been performing.... But I don't have any regrets over not accepting their offer".
"Right now I have a really strong team. I like riding for Yamaha because the people are so real. It's too bad about the tires," he added.
Rossi, who trails Stoner by 44 points, has had problems with his Michelin tires all season.
Yamaha uses Michelin tires compared to the Ducati team which mounts Bridgestone tries.
Melandri's move from Honda to the Italian team, however, will not mean that Loris Capirossi will lose his ride with Ducati, Suppo said.
"Our doors remain open for Capirossi. He has done a lot for us and we are thinking of running a third bike just for him next season," the team manager said.
"There is nothing strange about this nor does this represent a demotion. Technically, it is possible and we just have to work out things with him. If we have a third bike, it will be only and exclusively for Capirossi," Suppo explained.
Capirossi, 34, is in his 18th season as a Grand Prix rider and has been with Ducati since it returned to Grand Prix racing in 2003.
He is a three-time 125cc world champion and won the 250cc title in 1998
Stoner won Sunday's USA Grand Prix while Melandri placed third, Rossi came in fourth and Capirossi failed to finish.
