"I am thrilled to be joining the great talent and management team at Fox News," Palin said in a statement posted on the network's website. "It's wonderful to be part of a place that so values fair and balanced news."
Fox said that according to the multiyear deal, Palin will offer political commentary and analysis on the cable channel, as well as Fox's website, radio network and business cable channel.
She also will host occasional episodes of Fox News' "Real American Stories," a series debuting this year that the network said will feature true inspirational stories about Americans who have overcome adversity.
"Governor Palin has captivated everyone on both sides of the political spectrum and we are excited to add her dynamic voice to the FOX News lineup," Bill Shine, executive vice president of programming, said in a statement.
Palin, 45, is hugely popular with conservatives and has more than 1.1 million Facebook followers.
She stepped down as Alaska governor in July, 17 months before the end of her first term in office and less than a year after she vaulted to overnight fame as John McCain's running mate.
The bombshell resignation stunned even supporters and fueled widespread speculation on her next career step - with predictions ranging from seeking the presidency in 2012 to hosting a conservative talk show.
She told Barbara Walters in November that a 2012 presidential bid was not on her radar but added she wouldn't rule out playing some kind of role in the next presidential election.
Since resigning, Palin has had colossal success with her best-selling memoir "Going Rogue," released four months after she left office. She finished a nationwide tour in December after hitting some of the political battleground states from the 2008 election and drawing thousands of fans.
Palin majored in journalism with an emphasis on broadcasting at the University of Idaho and worked part-time as a weekend sportscaster in the 1980s for KTUU-TV in Anchorage, using her then-maiden name Heath.
Her upcoming commentary career had her Facebook fans giddy with excitement.
"Tell 'em like it is girl!!!!!!," one person wrote on a post.
"I look forward to seeing you on Fox....but I hope it doesn't prevent you from running in '12!," another wrote.
