The French manufacturer said the 30-year-old Finn would take part in 12 of the 13 championship events in 2010 for its Red Bull-backed junior team.
“I always wanted to compete in rally, especially in the world rally championship at some point in my career,” said Raikkonen. “This is a new but very exciting challenge.
“For the moment we have a one-year contract and we will see how it goes for the future.
“I am really looking forward to testing and taking the start of the first rally.”
Raikkonen, winner of 18 grands prix, had already said he planned to take a year out of Formula One after being replaced at Ferrari by Spain’s double world champion Fernando Alonso.
The Finn refused to contemplate joining any Formula One team that would not be competitive for the championship.
His decision to go rallying ended any thought he might end up at Mercedes as world champion Jenson Button’s replacement.
Britain’s Button has moved to Raikkonen’s former team McLaren alongside 2008 champion and compatriot Lewis Hamilton.
Raikkonen has previous world rally championship experience, having competed in this year’s Finnish round in a Fiat after also entering three non-championship events, but his new challenge is a big step up.
Citroen’s French driver Sebastien Loeb has won the last six world rally titles and Raikkonen will have one of the most competitive cars in the C4.
The team said Raikkonen’s co-driver will be compatriot Kaj Lindstrom, who partnered now-retired Tommi Makinen to four successive world titles in the 1990s. France’s rising hope Sebastien Ogier will drive the junior team’s other car.
They will not compete in New Zealand.
Loeb and Spaniard Dani Sordo will continue to drive for the main