Fifteen warm-weather destinations will be served from the airport, including Ibiza, Tenerife, Alicante and Paphos, with the first flights set to take off on 30 March 30 2017.
More than 200 jobs are expected to be created as part of the expansion, including flight and cabin crew, engineers and ground operations staff.
Steve Heapy, chief executive of Jet2.com and Jet2holidays, described the announcement as incredibly exciting, saying it would provide further growth and investment for the region.
He said: "It's fantastic to be bringing our friendly low fares, great value package holidays, plus our brand new aircraft to Birmingham Airport.
"This is our most significant programme launch for some time, giving local travel agents a choice of 15 of the most popular sunshine destinations, including 11 Spanish hotspots, two Greek islands, plus Paphos and the sunny Algarve.
"We're thrilled that even more of our agents' customers can now experience our award-winning flights and holidays and we look forward to our first flights taking off next year."
Paul Kehoe, CEO of Birmingham Airport, said: “It’s great news that today we welcome Jet2.com and Jet2holidays as partners of Birmingham Airport.
“This new addition to the family here at Birmingham Airport means new jobs in our region and even more choice for travellers, with 15 routes to popular and affordable sun destinations. This friendly leisure airline is in response to customer demand offering great value deals to some of the most popular sunshine routes on a fleet of brand new 737-800 aircraft.”
Click below to receive daily regional business updates
Our BQ Bulletin emails will land in your inbox at 7.30am, Monday to Friday, with a mix of the latest local business news, national news, and features to inspire you. Sign up here!
Click here to read our privacy statement