The 'Heart Of Gold' singer will close the main stage on Sunday, June 14. Young is expected to play a mixture of hits and new material from his forthcoming Fork In The Road album.
"I have tried every year since we restarted the event to book Neil Young," said festival organiser John Giddings.
"His music is part of my life and has inspired generations ever since. I'm sure that his performance will be talked about for years to come."
Last month British rock acts Razorlight and Stereophonics were confirmed as co-headliners for the Saturday night.
The Friday lineup was confirmed in January and will feature The Prodigy, Pendulum, Basement Jaxx and The Ting Tings. It was also revealed last month that Manchester baggy veterans The Charlatans will be performing and curating the Big Top at the three-day event.
Isle of Wight takes place on June 12, 13 and 14 at Seaclose Park, Newport. Tickets are currently on sale.