"I’m pleased to confirm that I will be racing with Sahara Force India in 2017 as the team and my supporters have concluded their agreements," said the 26-year-old in a statement.
"I’m very happy with this team and I have a good feeling for the future."
Perez, who has rebuilt his career at Force India having been dropped by former champions McLaren after a single unhappy season there in 2013, has raced to two third-place finishes this year.
His haul of 74 points has been instrumental in helping the team climb to fourth in the constructors' standings ahead of former champions Williams.
Force India team principal Vijay Mallya said in July that Perez, who had been linked to Renault and even Ferrari, would remain with the team next year alongside German Nico Hulkenberg.
But the complex commercial agreements that needed to be hammered out between the team and his backers, who include Mexican telecoms billionaire Carlos Slim Domit, had delayed any confirmation.
Perez is currently eighth in the drivers standings, one place ahead of Hulkenberg who is 24 points adrift.
(Reporting by Abhishek Takle, editing by Alan Baldwin)
