Austrian media reports said the 24-year-old has inked a minimally three-year deal.
"Continuity is important to us," Dr Helmut Marko said on Red Bull-owned Austrian television Servus TV.
"The contract is therefore for at least three years, as Daniel was not only the youngest candidate but also the one with the most potential."
Champions Kimi Raikkonen and perhaps even Fernando Alonso were reportedly considered for the plum seat alongside Sebastian Vettel, but team boss Christian Horner said the Red Bull-groomed Ricciardo was ultimately a "very logical choice".
"We could have taken an experienced driver, somebody guaranteed to deliver to a relatively known level," admitted designer Adrian Newey.
"Or equally we could take on a much younger driver in the hope that they'll develop to a very high level."
He said the decision was similar to Williams' deliberations at the end of 1992, when the new champion Nigel Mansell departed.
"We could stick with Riccardo Patrese or take a punt on a young driver called Damon Hill who was our test driver at the time," said Newey.
On the other hand, Red Bull's decision might be interpreted as a nod to German Vettel's increasing influence at the team, as he looks set to win a fourth consecutive world championship this year.
Indeed, the German newspapers Welt and Bild both described Ricciardo as a "nobody".
And Marko admitted Vettel had a say.
"It is a team decision, so of course Sebastian was asked for his opinion," he said.
The timing of Tuesday's announcement was also odd, according to the Telegraph correspondent Tom Cary.
He said it came "in the middle of football's transfer deadline frenzy", and also with many of the sport's top journalists at the London premiere of the new F1 film Rush.
"Perhaps Red Bull did not want the publicity," said Cary. "The Austrian-backed team have been criticized in some quarters for being too conservative with their choice."
Red Bull, however, insist Ricciardo is not a 'number 2', and that he will enjoy equal status and machinery alongside Vettel.
But Dr Helmut Marko also acknowledged that, coming to the champion team from Red Bull's midfield runner Toro Rosso, Ricciardo will take some time - "three to five races" - to steadily adjust and get up to full speed.
For Ricciardo, the news finally becoming official was a big relief.
"It was a bit of a wait," he grinned on Servus TV.
Marko insisted Ricciardo's current teammate, the similarly Red Bull-groomed Jean-Eric Vergne, had also been in the running.
"When they knew Mark Webber was leaving us, both of them upped their game," he said.
"Unfortunately, there can only be one. But Jean-Eric will have another opportunity next year at Toro Rosso. He is also slightly younger -- he just needs to have patience," added Marko.
Now owned and rebuilt by the energy drink company, the Austrian grand prix circuit in Styria is now called the Red Bull-Ring.
Austrian radio ORF said construction work to get the venue ready for formula one next year is now underway.
A spokesman for the Red Bull Ring operator Projekt Spielberg GmbH confirmed the report.
It was announced in July that Dietrich Mateschitz and Bernie Ecclestone had agreed a provisional deal to return F1 to Austria on July 6 next year.
Kleine Zeitung newspaper subsequently reported that the 2014 race will in fact take place a week earlier than that, on June 29.
The same newspaper now reports that an embankment on the front straight is currently being removed.