Abrams will co-write Episode IX, which is due to be released in 2019, with Argo screenwriter Chris Terrio.
It will be a return to the Star Wars universe for the director, who oversaw the launch of the new era of the film series in 2015 when he directed The Force Awakens.
“With The Force Awakens, JJ delivered everything we could have possibly hoped for, and I am so excited that he is coming back to close out this trilogy,” said Lucasfilm president Kathleen Kennedy.
Abrams takes over from Colin Trevorrow, who left the project last week,with Lucasfilm and parent company Disney citing creative differences as the reason for his departure.
It is the second Star Wars film to lose a director this year, after filmmakers Phil Lord and Chris Miller were removed as directors of the upcoming spin-off about Han Solo.
Oscar-winning director Ron Howard was brought in to oversee the remainder of the film’s production.
The Force Awakens was a box-office success and is the third-highest-grossing film of all time behind Avatar and Titanic.
Episode IX, the final part in the latest trilogy, will be produced by Kennedy and Abrams, Michelle Rejwan, Bad Robot and Lucasfilm.