The decision, announced in Johannesburg, follows days of uncertainty over the glitzy event, which was hailed as the sport's future on its debut last year but was thrown into doubt by recent terror attacks in Mumbai and Lahore.
Organisers took the dramatic step of shifting the event abroad after Indian authorities could not guarantee security because of a clash with national elections, naming South Africa as the venue just three days later.
"To move the event outside India has been one of the hardest decisions that the Board of Control for Cricket in India has had to take," said IPL commissioner Lalit Modi.
"But I'm equally confident that staging it in South Africa will be a major success. We extend a huge gratitude to our friends at Cricket South Africa for agreeing to host the Indian Premier League in such a short time."
The IPL and South Africa now face the mammoth task of organising the eight-team tournament, probably played over six venues, in just over three weeks with the start scheduled for April 18.
The event is likely to be shortened from six weeks to five and include double-headers, with all matches broadcast live in South Africa by the Johannesburg-based SuperSport channel.
The move abroad has been controversial in India, with an NDTV news channel poll showing 59 percent of people opposed it and only 26 percent were in favour.
Some 50 percent thought the relocation was a disgrace to India, revealing a sense of anger that India was not a trustworthy host of top-grade cricket.
"The decision to outsource the tournament, even as schedules were being repeatedly revised, has come as a bitter disappointment - publicly shared by the great Sachin Tendulkar - to millions of fans," The Hindu newspaper said.
"It is astonishing that Lalit Modi & Co. missed what every newspaper-reading schoolboy and schoolgirl was expected to know, namely that the 15th general election would be held in April-May 2009."
Tendulkar, who captains the IPL's Mumbai Indians and holds the all-time record for Test runs, said the players "would certainly miss playing in front of our supporters."
"It is obviously going to be different," he said. "In India it is about home games and away games. Right now, everything is going to be an away game."
Sri Lanka's star spin bowler Muttiah Muralitharan, who plays for Chennai Super Kings, agreed the move was unfortunate but inevitable.
"I guess it would not be the same this year," he said. "But at the same time, the game must go on, else cricket would die. This is the right decision."
November's Mumbai attacks, which left 165 dead, raised security fears for the tournament and this month gunmen in Lahore, Pakistan ambushed the Sri Lankan team's convoy, killing eight Pakistanis.
The decision to move the IPL also caused fresh worries for next year's Commonwealth Games in New Delhi, although organisers insist they are not worried about security.
The IPL has been seen as a fresh start for cricket and a shift from its traditional power bases to South Asia, where lucrative TV rights provide the sport's main source of income.
The new order is highlighted by the IPL's glittering auction, where team owners including Bollywood stars and Indian tycoons bid large sums of money to sign up the world's top players.
With the IPL heading for South Africa, the country is at the centre of the cricket world with Australia touring until April 17 and a 12-nation qualifying tournament for the 2011 World Cup starting next Wednesday.
The International Cricket Council eight-nation Champions Trophy, the second biggest tournament after the World Cup, will also be held in South Africa during September and October.
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