France's cars will still be run by DAMS, but new A1GP rules state that recognised racing teams are only allowed to run the race operations of two countries.
This means that Switzerland and Mexico, who were led to race wins by DAMS during the inaugural season, have been left out in the cold.
"This is a huge coup for us," a spokesperson for the South African team told autosport.com.
"DAMS were the team to beat in last year's series and we're honoured they have chosen us to for their second team. Hopefully this will help propel us into genuine title contenders in the second season."
Both sides are currently ironing out the details of the deal.
Meanwhile South Africa is sending a full complement of drivers to the official Silverstone test this week.
Last season's drivers Stephen Simpson, Tomas Scheckter and Gavin Cronje are joined by Honda F1 tester Alan van der Merwe and Adrian Zaugg, who races in the Formula Renault Eurocup series.