Mexican Sergio Perez has signed to race for Red Bull alongside Max Verstappen next year.
Red Bull said Perez had signed “initially on a one-year contract”.
“Alex is a valued member of the team and we thought long and hard about this decision,” team boss Christian Horner said.
“Having taken our time to evaluate all the relevant data and performances we have decided that Sergio is the right driver to partner Max for 2021.
“Alex remains an important part of our team as test and reserve driver with a key focus on 2022 development and we would like to thank him for his hard work and contribution.”
Red Bull decided Albon had not performed strongly enough in his 18 months with the team to justify continuing in a race seat.
And Horner said it had been “impossible to ignore Sergio’s performance in Racing Point, particularly in the second half of the season”.
He added that Albon was still a potential contender for a race seat in 2022.
It is Perez’s first chance in a genuine front-running car in a decade-lone Formula 1 career.
Perez said he was “incredibly grateful for the opportunity”.
He added: “The chance to race for a championship contending team is something I have been hoping for since I joined F1 and it will be a proud moment to step onto the grid in Red Bull colours alongside Max.
“You can be sure that I will give next season my full focus. The team has the same winning mentality as me and I know I am here to perform and help the team fight for another title.”
Horner said it would have been an “injustice” if Perez had not had a seat in F1 next year after such an impressive 2020, but added that the driver was “realistic” about what to expect going up against Verstappen.
“He knows the quality of Max,” Horner said. “He’s a seasoned racer now. He has a huge amount of experience. He knows what he’s going up against and the quality of Max, who has been in immense form the last couple of years. I don’t think he underestimates that challenge in any shape or form but he’s absolutely delighted to get the opportunity and prove himself.”
Perez was in danger of losing his seat in the sport following Racing Point’s decision to sign four-time champion Sebastian Vettel on a three-year deal from 2021 to partner Lance Stroll, son of team owner Lawrence Stroll.
The Red Bull seat offered him a lifeline which many will feel his performances this season justified.
Perez missed two races in the summer after contracting coronavirus but still finished fourth in the drivers’ championship behind Mercedes drivers Lewis Hamilton and Valtteri Bottas, and Verstappen.
His victory in Bahrain came after an outstanding drive in which he was last on the first lap after being crashed into by Ferrari’s Charles Leclerc, but fought his way back through the field before benefiting from problems that took out the Mercedes of George Russell, substituting for Hamilton, and Bottas.
He also scored a second place in the rain-hit Turkish Grand Prix in November.
Perez made his F1 debut for Sauber 2011, taking a second place for the team at the 2012 Malaysian Grand Prix. His performances there earned him a place at McLaren for 2013, but the team were beginning a competitive decline and he was dropped after one year, partly as a result of a political fight between chairman Ron Dennis and managing director Martin Whitmarsh.
Perez joined what was then called Force India in 2014 and had stayed there ever since, and was instrumental in forcing the administration process that ousted former owner Vijay Mallya and allowed Stroll to buy the team.
Despite driving for midfield teams his entire career, Perez has scored a podium in six of his nine seasons in F1.
Red Bull gave Albon every opportunity to justify them keeping him in the seat, but the team were not convinced.
He was out-qualified by Verstappen at every single race in 2020, and was on average 0.523 seconds a lap slower.
In races, while Verstappen took two wins and nine other podiums finishes in 17 races, Albon’s best results were two third places in the Tuscan and Bahrain Grands Prix.
He also spun when contending for strong finishes at the Emilia Romagna and Turkish races.