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Schumacher's team-mate will be Nico Rosberg who was at Williams this year.
Schumacher nearly returned to F1 when he attempted to replace Felipe Massa at Ferrari but that was not possible because of neck problems.
I think this is going to be interesting to see Schumacher back and see how competes against the likes of Lewis Hamilton and champion Jenson Button.
I think he will be assured of a fast car because Mercedes took over Brawn GP who won both the drivers and constructors' championships.
I can see McLaren and Ferrari being more competitive than what they were this year and I think that will make it difficult for Schumacher to win the driver's championship but I am sure he will be able to win some races.
Schumacher's joining Mercedes will unite him with Ross Brawn who was team principal when he was at Ferrari.
Meanwhile there will be four new teams on the grid next season. Lotus, Virgin Racing, Campos and US F1 are all expected to lineup on the grid next year.
Jarno Trulli and Heikki Kovalainen are going to be driving for Lotus whilst former Toyota driver Timo Glock and Lucas di Grassi will drive for Virgin Racing.
Campos has so far signed Bruno Senna and are still to announce the second driver.
US F1 are still to announce their driver lineup.