Honda acquired the 55% stake in BAR Honda it did now own from BAT on Tuesday, taking full control of the company it bought a minority stake in last year.
Honda said it will name the new team for the 2006 after an agreement with future sponsors.
Hiroshi Oshima, Honda's chief operating officer, said: "After discussing Honda's future F1 participation, we have decided that Honda should own 100% of the team.
"From next season, we will be even more energetic in our F1 activities, working hard as a team in order to improve our technology, develop our young engineers and achieve our goal of winning the World Championship."
It is hoping that with Jenson Button, who recently bought himself out of a Williams contract for an undisclosed sum to drive for the team, on board as the team's number one driver, the World Championship is winnable.
Honda's purchase of BAR was seen as inevitable given the tobacco advertising restrictions now in place in a number of European countries including the UK and Germany.
The team will continue to operate from its current base in Brackley, Northamptonshire.
The acquisition means Honda will be the sole owner of a F1 racing team for the first time since 1968.
The car manufacturer would not reveal how much it paid for the controlling BAR stake.
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