Under the three-year deal, the annual event will now be known as the Paddy Power PDC World Darts Championship.
This year’s tournament will take place from 15 December to 1 January at Alexandra Palace in London.
Previous sponsors of the event include William Hill and Ladbrokes.
“This tournament is the ultimate example of sport colliding with entertainment, a mix we at Paddy Power are naturally drawn towards,” Paddy Power’s marketing and brand director, Michelle Spillane, said.
“Getting stuck into a sponsorship as iconic as the World Darts Championship is hugely exciting for our brand. We can’t wait to make our mark.”
PDC chief executive Matt Porter added: “We’re delighted to welcome Paddy Power back to darts as our new title sponsors of the World Darts Championship.
“The World Darts Championship is the flagship event in darts. Paddy Power’s involvement will add extra excitement to an event which is already the highlight of the festive sporting period.”