Sanchez, the runner-up from American Idol's 11th season, signed with mentor Jimmy Iovine's Interscope Records, writes The Hollywood Reporter.
The 16-year-old singer will join some of the biggest acts in music on the label such as Lady GaGa, Lana Del Rey, Black Eyed Peas and Madonna.
She is also expected to release her album in October, which will have a more urban edge compared to the ballads she sang on Idol.
Meanwhile, Pickler, who placed sixth on the fifth season of Idol, has departed from Sony's BNA Records imprint.
Her manager Larry Fitzgerald told ABC News Radio: "Kellie's contract with Sony came to an end and they mutually decided not to renew."
Pickler released her third album 100 Proof earlier this year.
Watch Jessica Sanchez on American Idol below: