Button is not retiring but said he will be taking a "break" next year.
"We will have Jenson in the team which is the most important thing" said the Spaniard.
"To be clear, I'm very definitely not retiring", Button said, "I'm contracted for both 2017 and 2018, I intend to work hard on car-development, and I'm sure I'll get behind the wheel of the new auto at some point". "I'm contracted for both 2017 and 2018, I intend to work hard on car-development, and I'm sure I'll get behind the wheel of the new vehicle at some point".
He then moved to McLaren and brought his tally of grand prix wins to 15.
The former World Champion will be an ambassador for the team next year, but will also be a part of the simulator program and will on standby as a reserve driver if needed.
Button made the announcement alongside McLaren chairman Ron Dennis ahead of tomorrow's Italian Grand Prix.
"I've signed loads of autographs in my career, but, when I inked my signature on my McLaren-Honda contract today, it's safe to say I had an exceptionally special feeling as I picked up my pen to do so".
But they do have the option to reinstate Button as an active driver in 2018.
"It's a creative contract that works for both of us, a flawless solution for the circumstances within our team at the moment".
"Ok guys, well I want to start this session with an announcment of my own".
It means that for the first time in the 21st century, a Formula 1 driver line up will not have the 2009 world champion, having been in the sport for sixteen and a half seasons, amassing 297 Grand Prix starts at the time of writing.
The 36-year-old will do work in McLaren's simulator, attend a number of races to work with the team, maintain an F1 level of fitness and "remain current", as he put it. I'll be living as I said on my schedule.
Button is the only man other than Hamilton or Sebastian Vettel to have won an F1 world championship since Kimi Raikkonen did so in 2007.
"I feel awesome. Jenson is a great inspiration to any racing driver", said Vandoorne, who is racing in Super Formula in Japan this year.
Jenson Button will still be involved with McLaren till the end of the 2018 F1 season.
"My family is forever growing as well so it is nice to be able to spend time with them and not see them once a year and see they've grown. Together with Jenson, I'm sure he and I can take McLaren-Honda back to its rightful place: at the front of the grid".