Vladimir Putin made the announcement at a meeting of the Russian inner Cabinet.
Several Russian cities had applied to host the event after Russia's Dima Bilan won this year's contest in Belgrade. Deputy Prime Minister Alexander Zhukov said the strongest rival bid had come from St. Petersburg.
Zhukov, charged with overseeing preparations for the event, said Moscow's Olimpiysky sports complex would be the likely venue.
Contestants representing 43 countries will take part in the contest. Its final is scheduled for Saturday, May 16 next year.
Dima Bilan won the 2007 Eurovision Song Contest on May 24, beating 24 contestants to claim his country's first win in the event with his heartfelt ballad 'Believe'.
Bilan received 272 points from telephone voters for his stage show that also featured Hungarian violinist Edvin Marton and famous Russian Olympic figure skating champion Yevgeny Plyushchenko.
