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Hamilton's deal with the team is for three years, and is rumoured to be worth $100 million.
“It is now time for me to take on a fresh challenge and I am very excited to begin a new chapter racing for the Mercedes AMG Petronas Formula One Team,” said Hamilton in a team statement.
“Mercedes-Benz has such an incredible heritage in motorsport, along with a passion for winning which I share.
“Together, we can grow and rise to this new challenge. I believe that I can help steer the Silver Arrows to the top and achieve our joint ambitions of winning the world championships.”
Welcoming Hamilton to the squad, team principal Ross Brawn says he believes Mercedes will soon be well placed to challenge for the world title – an accolade it took as recently as 2009 under the BrawnGP banner.
“Over the past three years, we have been putting in place the foundations and building blocks that are needed to compete regularly for the world championship,” he said.
“Behind the scenes, we have assembled a team that is technically stronger, more experienced and better resourced. The potential is now there to match any other team on the grid, which is the minimum standard for a Mercedes-Benz works team. Our task is now to translate that potential into on-track performance for next season and beyond.”
The 43-year-old Schumacher, meanwhile, now appears destined for a second retirement. The seven-time world champion has been linked to the seat vacated by Perez at Sauber, although the seven-time world champion's motivation to make such a move appears doubtful.
In the Mercedes statement confirming Hamilton's signing, Schumacher said he is focused on his remaining races with the team.
“I have had three nice years with the team which unfortunately did not go as well as we all would have wanted on the sporting side,” he said.
“I wish Lewis well and for the team to achieve the success we worked so hard for in the build-up. I would like to thank the team for their trust and all the guys for their unconditional commitment. I will now concentrate on the next races.”