A five-year deal, which will see F1 return to the Paul Ricard circuit, near Marseille in the south of France, was announced by Christian Estrosi, president of the Regional Council of Provence-Alpes-Cote d'Azur, Monday.
Speaking at a press conference in Paris, Estrosi hailed the return as an important driver of "economic development and tourism" to the region, adding that the race will be held "in the summer of 2018."
Estrosi said that an independent audit by consultants, Deloitte had estimated the cost of hosting the race to be €30 million ($32 million), AFP reported
The last French Grand Prix was staged at Magny-Cours in 2008 with recently retired Felipe Massa taking the checkered flag.
The Paul Ricard circuit, also known as Le Castellet, last held an F1 race back in 1990.
French F1 driver, Romain Grosjean said he was "super happy for French fans." The 30-year-old, who raced for the US team Haas F1 in 2016 also posted a video message on his official Twitter account
The French Grand Prix was first staged in Reims in 1950, with Paul Ricard hosting 14 F1 races between 1971 and 1990 before Magny Cours became the preferred circuit.
Michael Schumacher holds the record for most French GP wins with eight, with four-time world champion and home favorite Alain Prost claiming victory six times between 1981 and 1993.
In recent years, Paul Ricard has been used for F1 testing with teams visiting last January to undergo wet weather tire testing for Pirelli -- the official tire supplier to the sport.
European races -- widely regarded as the heartland of the sport -- have come under pressure as F1 bosses have expanded the number of races taking place in Asia.
The Austrian Grand Prix returned to the calendar in 2014 after a 10-year absence and the German Grand Prix was also reinstated for the 2016 season, although it has been dropped for 2017.
Monza, home of the Italian Grand Prix, secured its short-term future at the end of November, penning a new three-year deal with F1 supremo Bernie Ecclestone to retain the historic circuit which has hosted more F1 races (66) than any other circuit.