Key will join the Sauber-run team on 1 September, taking over the role from Jan Monchaux.
He has been identified as the man to lead the team into its Audi era by Sauber Motorsport CEO Andreas Seidl, his former boss at McLaren in 2019-2022.
Key already knows the Hinwil operation well having served as technical director in the post-BMW period from 2010 to 2012, before he moved to Toro Rosso.
He was responsible for the C31, the car with which Sergio Perez and Kamui Kobayashi logged four podium finishes in 2012.
Key was at McLaren from 2019 until his release as part of a reshuffle earlier this year under new team principal Andrea Stella.
“I am delighted to welcome James back home to Hinwil as he joins us to shape the future of this team,” said Seidl.
“The operation he will find has changed a lot since his time here, but the same drive, the same commitment that contributed to making the team successful in his previous experience are still the same.
“I am sure that, together with this very talented and committed team, we will be able to continue on the path of growth on which we have embarked.
“James’s appointment is a crucial step on this journey. He has an outstanding amount of experience in the sport, not just as technical director, but also in various other roles within the technical organisation of a team.
“He will lead the transformation process of the technical side of the team, giving us the tools and direction we need to tackle the future.
“I also want to thank Jan for his precious contribution to taking Sauber to where it is now, following our most successful season in a decade, in which we climbed to sixth place in the Constructors’ Championship.”
Key admitted that there is much to do as Sauber morphs into Audi ahead of the German manufacturer’s entry in 2026.
“I am looking forward to leading the technical side of the team at one of the most critical junctures of its long history as we head towards a new and exciting future,” he said.
“There is a huge amount of work ahead of us, but I am confident that every single member of our team working in Hinwil will have the commitment, determination and hunger to get us to the top.
“We know it will require time, effort and perseverance, and the dividends from this work will only arrive over the next two seasons and beyond, but we have a journey ahead of us and a roadmap to follow which I am eager to get started.”
He added: “I am grateful to Andreas for the confidence he has placed in me and look forward to repaying his trust and working closely with him on the challenges and ambitions ahead.”
Autosport has learned that Monchaux has already been placed on gardening leave ahead of his official departure from the team.
