This season the 20-year-old from Monaco has tested with both Ferrari and Sauber, and enjoyed another four F1 practice outings with the latter, who will be known as the Alfa Romeo Sauber F1 Team for 2018.
He'll have a new partner for the season, with Formula 2 champion Charles Leclerc stepping up to make his F1 race début in Melbourne.
Ericsson failed to score a single point in the 2017 F1 season while his team-mate Pascal Wehrlein managed five only to lose his race-seat.
There was always a doubt as to whether Ericsson would hold on to his seat, however, with Antonio Giovinazzi waiting in the wings, but they have opted to give the Swede another chance.
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"Alfa Romeo will offer the opportunity to two young pilots as has already been the case in the past with two champions Kimi Raikkonen and Felipe Masa, who debuted here", Fiat boss Sergio Marchionne said on Saturday at the official unveiling. However, Ericsson's close ties to Sauber owners Longbow Finance appear to have edged it.
As expected, Mercedes protégé Wehrlein is left out of the line-up.
Since the departure of former team principal Monisha Kaltenborn, Sauber has increasingly positioned itself as a Ferrari satellite team. "[Alfa] will return to Formula 1 after an absence of more than 30 years", said Marchionne.
Sauber has unveiled its concept livery for the 2018 Formula 1 season, in the wake of its collaboration with FCA brand Alfa Romeo.