Current driver Alex Albon remains an important member of the team and takes on the role of test and reserve driver with a key focus on 2022 development, simulator work and tyre testing.
Perez made his Grand Prix debut in 2011 and since then has become one of the sport's most consistent performers and tenacious racers. His recent run of form and victory at the Sakhir Grand Prix made him the favoured choice to join Red Bull, initially on a one year contract.
"Alex is a valued member of the team and we thought long and hard about this decision," said Christian Horner. "Having taken our time to evaluate all the relevant data and performances we have decided that Sergio is the right driver to partner Max for 2021 and look forward to welcoming him to Red Bull Racing.
"Alex remains an important part of our Team as Test and Reserve Driver with a key focus on 2022 development and we would like to thank him for his hard work and contribution."
The official press release didn't contain comment from either driver, with sources suggesting that Albon was only informed of the decision a couple of hours before the official announcement.
The increasingly abysmal Daily Mail ran a story earlier today claiming that the Thai driver faced the "axe" after a "disastrous campaign", but this was the tabloid up to its usual sensationalist click-baiting again.
Albon's biggest problem over the course of the season was his inability to get closer to Max Verstappen's pace, particularly in qualifying. This inevitably led to him having to work harder on Sunday afternoons.
The very fact that he was the only driver to be out-qualified at all 17 races speaks volumes, and this in turn compromised his races.
While Perez has shown remarkable consistency and is now a proven-winner, it is going to be interesting to see how he fares against Verstappen, around whom the team is clearly built.
If nothing else, this is a pairing that could provide some sparks over the course of 2021.