She joins Elizabeth Hurley and models Liya Kebede and Carolyn Murphy as the face of the cosmetics brand. Her first ad will be for the Pleasures fragrance, to mark its 10th anniversary. The campaign will run towards the end of the year.
John Demsey, global brand president of Estee Lauder, said: "Gwyneth Paltrow is perfect for Estee Lauder. She is one of the most important actresses of our time, and she is smart, interesting and a fashion icon."
Paltrow won an Oscar for her role in the film 'Shakespeare in Love' and has also starred in films including 'The Talented Mr Ripley' and 'The Royal Tenenbaums'.
The move to represent a brand that is part of a global corporation could raise eyebrows with fans of the actress and her husband Chris Martin, who fronts the band Coldplay and campaigns against third-world debt.
Martin caused a furore last week when he attacked his record company EMI and declared that shareholders were evil.
"I don't really care about EMI. I'm not concerned about that. I think shareholders are the greatest evil of this modern world," he said.
Estee Lauder is part of Estee Lauder Companies Inc, a company that operates in 130 countries and owns brands include Clinique, Origins and Aramis.
"I am very proud to be a part of such a fine company," Paltrow said.
"Its roots have been deep in the culture of classic American beauty for decades, and I am honoured to be associated with a brand as iconic as Estee Lauder."
Estee Lauder also revealed that Hurley would be the new face of its luxury skincare line Re-Nutriv, and is to appear in an advertising campaign for the brand later this year. The range includes skin creams that retail for £115 for a 30ml bottle.
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