Volvo will enter a factory team in next year's V8 Supercars championship.
The Swedish manufacturer's motorsport partner Polestar will join up with V8 squad Garry Rogers Motorsport, which currently runs Holden, to field two S60s.
Volvo will become the V8 series' fifth brand, joining recent new arrivals Nissan and Mercedes alongside Holden and Ford.
V8 chief James Warburton described Volvo's arrival as a vindication of the championship's international appeal.
"To have another prestigious brand like Volvo in our sport is a red letter day for V8 Supercars," he said.
"The strength of V8 Supercars is such that global brands, not limited to car manufacturers, are becoming increasingly aware of and directly involved in the business.
"It is my vision to build V8 Supercars into one of the strongest brands in the world with the partners to match. That is the level of untapped potential I believe this sport has."
Volvo Australia managing director Matt Braid added: "Volvo has a rich motorsport heritage in this country, including winning Australia's most famous race, Bathurst, 15 years ago this coming October.
"As the first luxury car brand to enter a factory team in the V8 Supercars Championship, we're determined to add to this heritage, while strengthening the presence of the S60 model line and the Volvo brand here in Australia."
Volvo won Bathurst when it ran to super touring regulations in 1998, with Rickard Rydell and Jim Richards taking victory.