The school made the announcement on Monday, ending weeks of speculation that the former Baylor quarterback was the front-runner to start at the position ahead of last year's starter Sean White.
Auburn coach Gus Malzahn tweeted the news: "The team is excited for Jarrett and ready for the season!"
The announcement comes on the heels of Auburn's second scrimmage on Saturday.
Malzahn said White is the No. 2 quarterback and "could start for a whole lot of teams in this league."
White tweeted that he was "all in" despite not winning the starting job.
All in!! WarEagle— Sean White (@SeanWhiteAU) August 14, 2017
Stidham started three games as a true freshman at Baylor in 2015, completing 75 of 109 passes for 1,265 yards, 12 touchdowns and 2 interceptions. After the firing of coach Art Briles in May 2016, Stidham announced that he was leaving the program. He attended a junior college but didn't play football last season before signing with Auburn.
Malzahn said Stidham's leadership and ability to win over his teammates and coaches stood out as much as the on-the-field abilities.
"He is a gym rat as far as football goes," Malzahn said. "He's always in the film room trying to get better. He's got an extremely strong arm. He's got a lot of skills that could be a very good quarterback.
"I think he's a lot better athlete than people think. He runs a 4.6 (40). He's got a 35-inch vertical. He's pretty athletic."
The 6-foot-3, 214-pound sophomore has the accuracy and mobility to be a good fit in Malzahn's system. He earned A-Day offensive MVP this spring in his first showcase in front of Auburn fans, completing 16 of 20 passes for 267 yards.
Auburn opens the season on Sept. 2 against Georgia Southern before traveling to defending national champion Clemson in Week 2.
Information from the Associated Press was used in reporting.