Allison left Ferrari and Italy last year, following the sudden death of his UK-domiciled wife.
And his appointment at Brackley based Mercedes, starting on March 1, comes after Paddy Lowe’s recent switch to Williams.
“It’s a massive privilege to join Mercedes; I look forward to playing my part” Allison said
“I am very excited to be getting back to work after this time away from the sport. It’s a massive privilege to be given the trust of a position in a team that has done so spectacularly well in the past three seasons. I am really looking forward to playing my part in helping Mercedes go from strength to strength in the coming years.”
Mercedes F1 team boss Toto Wolff concluded:
“I am delighted to welcome James to Mercedes and very much looking forward to working with him. Our technical team is extremely skilled at every level and at the top of its game after delivering three world championships in a row.”
“It wasn’t an easy task to find the right personality who can strengthen our experienced group of engineers, give our talented young team members the space to develop and also bring his own vision to this role. James is a sharp engineer; I think we have found the perfect guy and the right fit with our senior leaders.”