Azerbaijan will take its place on the Formula One calendar in 2016 as the new Grand Prix of Europe.
Capital city Baku will host the event after signing a deal with F1 supremo Bernie Ecclestone.
The race adds to F1's push into eastern Europe of late, with Russia due to host its inaugural grand prix later this season at a purpose-built circuit around the Sochi Olympic Park used for the winter Games.
The event will become F1's latest street race, joining the likes of Monaco and Singapore, with Baku's old medieval city and the Caspian Sea forming part of the backdrop.
Confirming the deal, Azerbaijan's minister of youth and sport Azad Rahimov said: "I am delighted to officially announce we have signed a contract to bring Formula One racing to Baku in 2016.
"Baku will be a spectacular addition to the Formula One calendar.
"Our location at the crossroads of eastern Europe and western Asia is a new frontier for Formula One racing.
"Azerbaijan is a modern European country that has established a reputation as a centre of sporting excellence.
"The deal to bring Formula One to Baku is a very significant new chapter in our ongoing success to attract the world's largest sporting events to our country.
"The course we are planning to design will be similar to leading street circuits already on the calendar."
Ecclestone, meanwhile, added: "We are very happy Baku has joined the Formula One family.
"This will be a street race, which will pass through interesting and picturesque parts of Baku, and will meet the current Formula One criteria."
Baku will be the latest venue to stage a Grand Prix of Europe, with Valencia the previous host in 2012 prior to its exit due to costs.