The International Olympic Committee has voted to create a Youth Olympics for 14 to 18-year-old athletes.
The new games will inspire young people, the IOC hopes
The first event will be staged in 2010, with around 3,500 athletes competing.
It is the first international sports tournament set up by the IOC since the Winter Games were established more than 80 years ago.
The IOC president, Jacques Rogge, said the youth games would be an inspiration to children around the world to participate more in sport.
With young people failing to tune in to television coverage of the Olympics, the IOC has said it needs to change in order to survive.
Rise in obesity
"Today we observe a widespread decline in physical activity and an increase in obesity," President Jacques Rogge told an IOC session in Guatemala City.
He blamed fewer physical activities in schools and the disappearance of open spaces in cities, as well as the rise of computer culture.
"One can speak of screen addiction," Mr Rogge said. "Multimedia, with its elaborate graphics... is sometimes more appealing than sport."
The summer Youth Olympics will cost about $30 million (£15 million) and the winter version between $15 million to $20 million (£10 million).
The Youth Olympics are expected to be based on the traditional Olympics, with a winter event taking place two years after the first summer Games.
The first host city will be decided next February.
Judges, referees and delegation officials will also be young people.
On Wednesday, the IOC meeting selected Sochi as the venue for the 2014 Winter Olympics.