Red Bull had previously said that it is open to lending out Albon to another grand prix team, but has now announced that he will be racing in the first year of the DTM's GT3 era whenever his duties as the outfit's F1 test and simulator driver allow.
An announcement regarding the driver Albon will alternate the seat with will be made at a later date, along with the team running the programme and the car that will be used.
Red Bull junior Liam Lawson, who finished fifth in FIA Formula 3 last year, will also compete in the DTM, driving for the full season.
It is unclear if Lawson will double his DTM commitments with a full season drive in Formula 2 after appearing in the post-season test with Hitech alongside fellow Red Bull protege Juri Vips.
"The DTM with a high-class field and GT3 sports cars is an interesting platform and a real challenge, both for successful race drivers like Alex Albon as for our Red Bull junior driver Liam Lawson," said Red Bull motorsport boss Helmut Marko.
Albon and Lawson are the first two drivers to be confirmed for the 2021 DTM season.
Red Bull has previously been involved in the DTM, most famously sponsoring the factory Audi of two-time champion Mattias Ekstrom during his last few years in the category.
"Formula 1 drivers like Alex Albon, DTM stars like three-time champion Rene Rast, GT professionals and young talents like Liam Lawson - that is a high-class driver mix the way I would like it for the 2021 DTM season," said DTM chief Gerhard Berger.
"It is also a perfect fit that ex-Formula 1 world champion Jenson Button has already submitted an entry for the DTM with his team. Alex Albon is a young, ambitious driver and an outstanding gain for the DTM."
A total of five teams have already committed to the DTM's first season featuring GT3 machinery, namely GruppeM (Mercedes), 2 Seas Motorsport and Jenson Team Rocket RJN (both McLaren), Team Rosberg and Team Abt (both Audi).