Movies
Rex Features
The Mexican filmmaker will relocate to New Zealand for four years to film the two-part prequel to the Lord of the Rings trilogy.
He revealed last month that he was "99%" likely to direct the movies, but finally closed a deal on Wednesday.
It is thought that he will work with Peter Jackson, Fran Walsh and Phillipa Boyens on the script.
He said: "I am indeed blessed to become a part of the filmmaking community that Peter, Fran and their extraordinary team of collaborators have created in New Zealand.
"Contributing to the Lord of the Rings legacy is an absolute dream come true."
Del Toro will film The Hobbit and its sequel - which deals with the 60-year period between The Hobbit and The Fellowship of the Ring - back to back from next year.
Movie Reviews
'Extremely Loud & Incredibly Close' reviewTom Hanks features in a long and winding journey through New York after 9/11
At the Movies
David Lynch: 10 reasons to worship himIt's time to celebrate director David Lynch as the BFI screens a season of his films.
Movies Interviews
Max von Sydow 'Extremely Loud' interviewActing legend Max von Sydow on Extremely Loud & Incredibly Close, The Exorcist and Flash Gordon.
Box Office Charts
'The Woman in Black' wins UK box officeThe Woman in Black beats The Muppets and Star Wars at the the UK box office.
