Commissioner Adam Silver, Mayor Rahm Emanuel and Bulls executives Michael Reinsdorf and John Paxson were on hand for Friday's announcement on the United Center floor.
Silver says Chicago faced "a lot of competition" to bring it back and the city's plan put it "over the top."
Renovations in and around the arena, a new 10,000-seat facility on the Near South Side and Emanuel's desire helped land the game.
This will mark the first time the Bulls host All-Star Weekend since 1988. Michael Jordan was the MVP of that game and also won the Slam Dunk Contest in a famous duel withAtlanta Hawks star Dominique Wilkins.
Information from The Associated Press contributed to this report.
Relive the 1988 dunk contest
With Chicago being the new destination for the 2020 NBA All-Star Game, revisit the moment when Michael Jordan won the dunk contest in the Windy City.