The 32-year-old Delhi opener has been part of the Delhi Daredevils since the IPL began in 2008. Under his leadership, Delhi Daredevils reached the semi-finals in the first two editions of the IPL and also topped the league stage in 2009.
Sehwag said he was looking forward to taking the Daredevils to new heights in IPL-4.
"For me there cannot be any other team than Delhi Daredevils in the IPL. As someone who grew up playing cricket in Delhi I am very proud to be playing for the Delhi Daredevils. I am delighted to be part of the Delhi Daredevils and lead the team," said Sehwag.
Srinivas Bommidala, chairman of GMR Sports, said Sehwag was the source of inspiration and strength for both young and experienced players. "He is a leader who paves the way by example," he said.
P.B. Vanchi, director GMR Sports, said: "Viru has been an integral part of the Delhi Daredevils from the day it was formed. He has been the face of the team and an icon best suited to lead our team. Sehwag's attacking style at the start of the innings sets the tone for the rest of the team."