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.