The announcement will see the German marque operate its first works single-seater program alongside its ongoing FIA World Endurance Championship and DTM projects.
Audi has enjoyed partial involvement in Formula E through a technical alliance with the Team ABT operation for the last two seasons.
As part of the arrangement, the manufacturer will offer further technical and financial support to the squad during the upcoming 2016/2017 season, before the team is added to its works motorsport program.
“Electric mobility is one of the key topics in our industry,” said Audi board member Dr. Stefan Knirsch.
“We intend to evolve into one of the leading premium car manufacturers in this field.
“By 2025, every fourth Audi should be an electric vehicle. The first model for this is planned to be an SUV we're going to present in 2018.
“In the light of these plans, adapting our motorsport program and taking up a commitment in a fully electric racing series is only a logical move.”
Audi motorsport boss Wolfgang Ullrich believes moving into Formula E with Team ABT is an ideal pathway for the firm to further develop its technologies.
“Audi has consistently been using motorsport to test and develop new technologies further for subsequent use in production,” said Ullrich.
“With quattro drive we revolutionised rally racing and subsequently set standards in circuit racing as well.
“In the 24 Hours of Le Mans, Audi was the first manufacturer to have achieved victories with a TFSI engine, a TDI and a hybrid race car, so writing motorsport history on several occasions.
“Now we intend to repeat this in fully electric racing. Formula E with its races being held in the hearts of major cities is an ideal stage for this purpose and Team ABT Schaeffler Audi Sport a logical partner for us.”
Audi is the latest manufacturer to throw its weight behind the category which also features involvement from Renault, Mahindra and Jaguar.