Fox network made the formal announcement about Lovato, 19, and Spears' appearance on the show at their programming upfront in New York City Monday, said The Hollywood Reporter.
Spears, 30, along with fellow pop star and tablemate Lovato, arrived onstage with creator Simon Cowell.
"I couldn't be more excited to join The X Factor judging panel. I'm a huge fan of the show and now I get to be a part of the action. Simon and LA better watch out," Spears said in a statement.
"Camp Rock" star Lovato and 'I Wanna Go' hitmaker Spears will join Simon Cowell and LA Reid who are the only original judges from first season.
"I'm so thrilled to join this legendary group of judges on the show. To be able to spend each week with Simon, LA and Britney watching the best that America has to offer is truly a dream come true," Lovato said.
No details as to how much Lovato's contract is worth have been leaked, however, Spears is thought to have negotiated a USD 15 million pay packet to be a panelist on the show.
Show creator Cowell tweeted, "'Can't believe it's finally happened. Very exciting!"
The singers will replace Paula Abdul and Nicole Scherzinger, who were axed after poor ratings on last year's debut series.
A new host for the show has yet to be announced after Steve Jones was axed after just one series.
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