The ATP Cup will last 10 days and be spread across three cities from January 3, a week before the Australian Open.
Ranking points will be on offer along with an £11.75million prize pot, with qualification based on the ranking of the country's number one player.
However, the new event is scheduled to take place just six weeks after the International Tennis Federation's revamped World Cup-style Davis Cup.
Speaking on Wednesday, world number one Novak Djokovic had voiced his fears about the future of the 118-year-old Davis Cup competition, claiming two similar events in the space of six weeks was "not sustainable".
Earlier in the week Alexander Zverev, the world number five, said he felt none of the top players would play in the Davis Cup.
Djokovic then gave his firm backing to the ATP Cup when he spoke at the launch of the new event at London's 02 Arena.
"Representing our country is something that is a great privilege for all of us, we dream of getting the colours of our country on our tracksuits and going out on court and playing for, in my case, Serbia, rather than for myself," he said.
"Since we are in an individual sport the majority of times you are playing in individual events so it's really nice to have a new fresh event, the ATP Cup, to kickstart the year in the best possible way.
"To have an event like this a couple of weeks before the Australian Open is truly going to have an impact .
"Obviously we have the Davis Cup, a historical team event, but now we have the ATP Cup that is definitely going to be right up there from a players' perspective."
Three team events, including the Laver Cup which is entering its third year, seems excessive but Tennis Australia chief executive Craig Tiley insisted: "We know from a fans' point of view they love the team events, so yes I believe it is sustainable.
"We'll make sure in 2020 we run a great event and we will do whatever we can in partnership with the Tour and others to ensure the Davis Cup is also a magnificent global event."
Player burn-out remains a major topic of discussion across the sport but ATP chief Chris Kermode insists fitting yet another event into what is already a packed schedule will not pose a problem.
"The reason we chose January was because it isn't additive to the calendar," he said. "If this didn't exist they'd be playing another event anyway."
Britain's Jamie Murray is confident most players will choose to participate in both the Davis Cup and ATP Cup.
"My personal opinion is that both events are providing a lot of prize money, and I think that will encourage a large majority of the player field to play both events," he said.
"Me, I'm excited about the ATP Cup. I think it's going to be a great event for the ATP. It's a players' event."
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