London will host the men's end-of-season event - to be renamed the ATP World Tour Final - for four years from 2009 at the O2 Arena.
Currently named the Tennis Masters Cup and staged in Shanghai, the world's top eight singles and doubles teams compete in two round-robin groups.
The event will take place, on hard courts, in November 2009 with afternoon and evening sessions expected.
The 20,000-arena will also house a kids zone, hosted by the LTA.
Ticketing arrangements have yet to be confirmed.
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Etienne de Villiers, executive chairman of the ATP, told BBC London that the capital could host the event beyond the initial four years if it proves successful.
"We have tended to move it around a bit," said De Villiers. "We're joint venture partners, but we'll probably leave it there if it's successful."
And De Villiers is hopeful that the arena will attract a youthful crowd to tennis.
"I think it will be for children of all ages," he said. "There is definitely a young market for tennis and this event being where it is, hopefully it will attract young kids."
World number one Roger Federer said: "I love coming to London for The Championships each summer, so I am delighted that the end of season championships will be moving to one of my favourite cities in the world.
"I'm sure it will be a spectacular event in what looks like a fantastic venue."
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