Australian Formula One legend Alan Jones has urged Daniel Ricciardo to take full advantage of Red Bull's dominance and target a world championship with the team before it's too late.

Ricciardo will graduate next year from Toro Rosso to replace compatriot Mark Webber as Sebastian Vettel's teammate at Red Bull, after confirming a multi-year deal on Monday.

The 24-year-old from Perth edged out the likes of former world champion Kimi Raikkonen for the coveted drive, with Red Bull team boss Christian Horner declaring he was "absolutely" the right man for the job.

"He's really deserved this graduation on merit," Horner said.

"He's a talented youngster; he's committed; he's got a great attitude.