"I am thrilled to be joining the great talent and management team at Fox News," Palin said in a statement posted on the network's Web site. "It's wonderful to be part of a place that so values fair and balanced news."
Fox said that according to the multiyear deal, Palin will offer political commentary and analysis. She also will host occasional episodes of Fox News "Real American Stories," a series featuring true inspirational stories about Americans.
"Governor Palin has captivated everyone on both sides of the political spectrum and we are excited to add her dynamic voice to the FOX News lineup," Bill Shine, executive vice president of programming, said in a statement.
Palin is hugely popular with conservatives and has more than 1.1 million Facebook followers.
She stepped down as Alaska governor in July, 17 months before the end of her first term in office. Her resignation came less than a year after she vaulted to overnight fame as John McCain's running mate.
Palin worked part-time as a weekend sportscaster in the 1980s for KTUU-TV in Anchorage.
Her upcoming commentary career had her Facebook fans giddy with excitement Monday.
"Tell 'em like it is girl!!!!!!," one poster wrote.
Palin finished a nationwide tour in December to promote her best-selling book, "Going Rogue."