The signing follows his record-setting rookie campaign on the F1 auto racing circuit.
"I am with the right team to compete for race wins and both the drivers' and constructors' world championships in the future," Hamilton said. "We will have a lot of challenges ahead, but I am 100 percent positive I am with the people to take them on."
During the 2007 season, Hamilton was the first rookie to lead the drivers championship, but finished second, one point behind Ferrari's Kimi Raikkonen, in the closest finish in the circuit's history.
Reports have said the 23-year-old Hamilton will earn about $20 million a year.
The 2007 season also contained highly publicized tension with two-time F1 points champion Fernando Alonso, who has left McLaren and returned to Renault, with whom he won both his points titles.