Kidman, who will appear in the film 'Cold Mountain' with Jude Law, will be directed in the ads by Baz Luhrmann, who directed the Australian actress in the musical hit 'Moulin Rouge'. The campaign is reported to be backed by a $5m (拢2.95) to $8m budget.
Reports of a deal first emerged last year when Kidman, who divorced Tom Cruise in 2001, wore a pink couture gown designed by Chanel designer Karl Lagerfeld to the 2002 Academy Awards.
Kidman is the latest in a line of celebrities to represent the luxury French fragrance, which was famously favoured by Marilyn Monroe.
In the past, the brand, which was launched in 1921, has worked with stars including Catherine Deneuve and Estella Warren.
The signing of Kidman reflects a growing trend, also witnessed with Donna Karan signing Cate Blanchett, of beauty brands working with stars who are at the height of their powers.
In the past, it has been more usual for such brands to use stars when they on their way up rather than at the top of their careers. Earlier this year, Kidman won best actress Oscar for her portrayal of Virginia Woolf in the 'The Hours'.
"Ms Kidman was chosen because she represents a unique standard of elegance and embodies the spirit and modernity of Chanel," the company said in a statement.
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