Renault's F1 future had been uncertain given the financial pressures on the French car giant and a slump in demand due to the COVID-19 pandemic.
Daniel Ricciardo and Cyril Abiteboul of Renault
Image credit: Getty Images
It had said nothing would be "taboo" as it reviewed its business, with the sport's commercial 'Concorde Agreement' expiring at the end of the year. Renault finished fifth overall last season.
Formula One has moved to reduce costs, with a $145 million budget cap due to come in next season.
Some of the top teams are spending significantly more than that, although they also get a bigger share of the revenues and attract more sponsorship.
A major package of technical and sporting rule changes is due in 2022 which the sport hopes will narrow the gap between the top teams and the rest and make racing more sustainable.
Renault, who won world championships with Spaniard Fernando Alonso in 2005 and 2006, will have a vacancy in 2021 when Australian Daniel Ricciardo leaves for McLaren and Friday's announcement makes the seat more desirable.
Four-times world champion Sebastian Vettel is one name in the frame after Ferrari announced the German would be leaving at the end of 2020.
Another option could be the return of Alonso, who left McLaren at the end of 2018 but is keen on a comeback.