The event, featuring the top eight singles players and doubles teams of the year, will be the highest-profile tennis tournament held in the country.
The WTA came close to staging the 2023 Finals in Saudi, before going to Cancun in Mexico.
This year’s Finals will take place from 2 to 9 November in Riyadh.
The Next Gen ATP Finals, which features the best men under 21, was held in Saudi Arabia last year.
Saudi Arabia has been accused of using events to ‘sportswash’ its reputation amid accusations of violating human rights and restricting women’s lives and freedom of speech.
In January, Martina Navratilova and Chris Evert said hosting the WTA Tour’s flagship event in the kingdom would be a “step backward” for women’s tennis.
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But the WTA chief executive Steve Simon says that by choosing Riyadh, women’s tennis is “supporting significant change being made within the region”.
“The WTA has been breaking down barriers for more than 50 years,” Simon told BBC Sport.
“We want to create more opportunities for women to play tennis at the elite level, and I think by doing this, we believe that we can inspire more women and girls to get involved with the sport.
“We are a global sport. The WTA now has all of these events and people from around the world that do reflect different cultures and systems.”
The WTA says it assessed “multiple bids from different regions” and evaluated potential hosts on three criteria, including support for the organisation’s ambition to achieve equal prize money for women.
Prize money will rise to $15.5m (£12.24m) in 2025 and 2026, a significant increase on the $9m (£7.11m) prize fund offered at last year’s heavily criticised Finals.
The WTA has pledged to introduce equal prize money at all bar the smallest events by 2033. By way of comparison, the prize fund at last year’s ATP Finals in Turin was $15m (£11.84m).
