Schumacher out, Hamilton in

In a statement posted to the team's website on Friday, Mercedes revealed that Hamilton - currently a driver for McLaren - had signed a three-year contract. He will join German Nico Rosberg on the team.

"I am delighted to welcome Lewis Hamilton to our team," said Ross Brawn, the team's head. "The arrival of a driver of Lewis’ caliber is a testament to the standing of Mercedes-Benz in Formula One and I am proud that Lewis shares our vision and ambition for the success."

Schumacer's contract with Mercedes was set to expire at the end of the current season. He started racing for the team in 2010 after coming out of retirement.

Since then, his best finish was a third place this year in Valencia. The 2012 season has been particularly tough for Schumacher so far, as he was forced to drop out of over half the races in which he had started.

At last Sunday's Singapore Grand Prix, Schumacher struck another driver's car from behind it what was seen as a fairly major lapse of concentration.

Three 'nice' years, says Schumacher

"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," Schumacher said in the statement.

"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."

There was no word on Friday on whether Schumacher would try and continue racing or go back into retirement. He won 91 races and seven world titles between 1991 and 2006.

Risky switch for Hamilton?

The move by Hamilton is seen as risky by some. McLaren has consistently fielded competitive cars in recent races while Mercedes seems to be dropping off the back of the pack.

The 27-year-old, who won the Formula One title in 2008, has also been a long-time darling of the McLaren team, having joined them when he was just 13 years old. But, he has been frustrated that he has only one world title to speak of in an otherwise successful career.

"It is now time for me to take on a fresh challenge and I am very excited to begin a new chapter racing for [Mercedes]," Hamilton said. "Mercedes-Benz has such an incredible heritage in motorsport, along with a passion for winning which I share.

McLaren announced it has signed 22-year-old Mexican Sergio Perez in place of Hamilton.

mz/ipj (Reuters, sid, dpa)