Francesco Bagnaia will return to the VR46 team in 2017 - as part of its new Moto2 project.
The Italian was part of Valentino Rossi's team during its inaugural 2014 season - alongside Romano Fenati - but was then dropped in favour of Andrea Migno, although he continued as a member of the VR46 Riders' Academy.
After switching to Mahindra, Bagnaia took his first podium last season and has continued on an upward curve culminating in an historic victory at Assen - the first ever for the Indian manufacturer.
"I am happy to rejoin the Sky Racing Team VR46," said Bagnaia, currently fourth in the Moto3 standings with four podiums. "This new project in Moto2 is a great opportunity. I am proud to face this new challenge with a team that for me is like a family".
Bagnaia will be one of two VR46 Moto2 riders, with the other seat - and indeed the choice of chassis - currently unconfirmed following Fenati's dismissal.
"We are very proud to announce that in 2017 we will be on the grid with four young Italian talents," said team manager Pablo Neito. "We will continue in Moto3 with two KTMs and with two bikes in Moto2. The line-up of the team will be completed in the next few weeks, but we are glad to say welcome to Francesco Bagnaia.
"After the recession of the contract between Romano and the team, we decided to continue with our original plan that included two bikes in Moto2. We will define who will join Francesco in this new challenge in the next weeks. We are motivated to give to Pecco all our commitment and our professionalism."
Star rookie Nicolo Bulega has already extended his VR46 contract until the end of 2018.