The 22-year-old Busch will replace J.J. Yeley, who currently drives the No. 18 car for Gibbs and is now shopping for a job.
"Kyle has made his decision and is in the process of notifying the teams of his decision," said Jeff Dickerson, Busch's agent through Motorsports Management International.
"Kyle thought it was important that he speak to each car owner that went through the process out of respect for them. There are still many details to be worked out, and Kyle will not be making that decision public at this time."
Ray Evernham, one of the car owners who had pursued Busch, the hottest free agent since Earnhardt made public in June that he would be driving for Hendrick Motorsports, said there are no hard feelings about not being selected.
"We're not going to get him," Evernham said when contacted by phone Monday afternoon. "He's a good individual. I think we'll be long-term friends from this."
Busch was considering Dale Earnhardt Inc., Evernham Motorsports, Richard Childress Racing and Chip Ganassi Racing.
Team president J.D. Gibbs made it clear he would not expand his team beyond three cars. Busch will join two-time series champion Tony Stewart and Denny Hamlin, currently second in points, on the Gibbs team. There has been considerable speculation about Yeley's future. He currently is 21st in the standings with one top-10 finish. A source close to Yeley said he has been in communication with "three to four teams but has not signed with anyone."
The 22-year-old Busch is widely considered among those in the Nextel Cup garage as the series best raw talent.
"I don't know if he's the best driver, but raw talent-wise, he's the best talent to come down the pike since Tim Richmond," driver Kyle Petty said recently during the Brickyard 400 weekend.
Busch signed with team owner Rick Hendrick four years ago and moved to the Cup series in 2005. He has four career Cup wins, eight Busch victories and won four times in the Truck Series. He made the Chase for the championship last season, but finished 10th in the standings.
He has one victory this season, is eighth in the current points and appears to be a contender for the Chase.
Angelique S. Chengelis is a contributor to ESPN's NASCAR coverage. David Newton covers motorsports for ESPN.com.