Hull's bid, which promises £15m programme of cultural events, is chosen ahead of Dundee, Swansea Bay and Leicester.
Hull has been chosen to be the UK's city of culture in 2017, beating three other shortlisted cities for the title.
The announcement was made in Westminster by the culture secretary, Maria Miller. "This is brilliant news for Hull and everyone involved in the bid there," she said.
She added: "This year's UK city of culture, Derry-Londonderry, demonstrates the huge benefits that the title brings. These include encouraging economic growth, inspiring social change and bringing communities together.
"It can produce a wonderful mix of inward investment, and civic pride and I hope Hull's plans will make the most of all that being UK city of culture can bring."
The leader of Hull city council, Stephen Brady, told the BBC: "What I'm saying is thank you to the panel for changing Hull. Never again will Hull have the reputation that some people have put on it in the past.
"The people here, the wonderful people of Hull, appreciate what's been done, the decision that's been taken and we are on the move".
Hull was picked ahead of Dundee, Swansea Bay, and Leicester. Former Hull East MP John Prescott welcomed the announcement by tweeting:"It's happy hour again", a reference to the best known song of the Hull pop group The Housemartins.
The poetry of Philip Larkin, Hull university's notoriously grumpy librarian, formed a key part of the city's bid. The bid also included the voices of immigrants, among them a Polish-born supermarket worker and an Albanian-born filling station attendant.
The TV writer Phil Redmond, chair of the independent expert advisory panel, said: "It was the unanimous verdict of the panel that Hull put forward the most compelling case based on its theme as 'a city coming out of the shadows'.
"We were particularly impressed with Hull's evidence of community and creative engagement, their links to the private sector and their focus on legacy, including a commitment to enhance funding beyond 2017 and I'd like to congratulate all involved."
Hull's bid was delivered on two artist-designed bicycles, and promised a £15m programme with a cultural event every day of the year. This included an outdoor aerial spectacular honouring Larkin, built around his line "what will survive of us is love".
Larkin was born in Coventry, though he published most of his most famous work while living in Hull. Hull was the birthplace of the anti-slavery campaigning MP William Wilberforce, who also figures in the plans.
Wednesday's announcement comes after months of claims and counterclaims from the rival cities and last-minute final pitches to the judges in Derry, which currently holds the city of culture crown. The government first decided to create a UK city of culture every four years after Liverpool's tenure as the somewhat starrier European city of culture, brought the city an extra £753.8m.
Although Derry's year in the spotlight has been a critical success, and has brought crowds on to the streets for popular spectaculars such as the street theatre piece, The Return of Columcille, arguments have already started as to whether it was worth the money and the effort.
Sponsorship and income from ticket sales has been disappointing for many events; and what, if anything, the lasting legacy will be is debatable.
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