The 24-year-old from Perth won the coveted drive alongside Red Bull's three-time world champion Sebastian Vettel ahead of former world champion Kimi Raikkonen.
Ricciardo will take the No.2 seat on a multi-year deal from 2014, with Horner declaring he was "absolutely" the right man for the job and defending the decision to sign the relatively inexperienced driver over a proven force like Raikkonen.
"He's really deserved this graduation on merit," Horner said.
"He's a talented youngster, he's committed, he's got a great attitude.
"Yes, there's drivers that have obviously have great achievements under their belt. But if you don't give somebody the chance, how are they going to get those achievements?
"Daniel's very quick. We know he's very quick. It's a wonderful opportunity for him and I think he's going to be a big star of the future."
Ricciardo, who has been sponsored by Red Bull since 2008 and started driving for Toro Rosso last year, is following the path Vettel took in 2009 when he switched from Italy's Toro Rosso to their British-based sister team Red Bull Racing.
Horner insisted both Ricciardo and Vettel would be given equal treatment, but suggested the Australian may, at least initially, have to play second fiddle to his German teammate given his on-track superiority.
"Inevitably there'll be a natural pecking order and that will be determined by the driver that's in front on the track," Horner said.
"But both drivers, as has always been the case, will get identical opportunity and equipment."
Ricciardo was predictably excited about his future.
"I feel very, very good," Ricciardo said in a video posted on Red Bull Racing's website.
"Obviously it's a lot of excitement running through me right now.
"It's something I've worked at and worked for, and to hear the news I wanted is great. It's the next step in my career.
"I think, for sure, I'm going to have to put up with a little bit more next year with scrutiny or whatever. I'm ready for that."
"I want to get the best results for myself and the team."
Webber, who is retiring from F1 at the end of the season ahead of his switch to sportscar racing with Porsche, took to Twitter soon after the announcement to applaud Ricciardo on his appointment.
"Great stuff Daniel. You deserve it, some special days in the future I'm sure. Australian flag still flying too.. Little bonus," Webber tweeted.
Australian Grand Prix Corporation chairman Ron Walker said Ricciardo's signing was a win for F1 fans across the country.
"Having an Australian driver in the front ranks of Formula One can only be good news for our own event in Melbourne and for the popularity of the sport in this country," he said in a statement.
"Now we all wish Daniel well as he seeks to leave his own imprint on the sport."
Born: July 1, 1989 in Perth, WA
Lives: Milton Keynes, England
Current team: Scuderia Toro Rosso (promoted to Red Bull Racing from 2014)
F1 debut: 2011 British Grand Prix for HRT
F1 races: 42 (0 wins, 0 podiums)
Top-10 F1 race finishes: 9
1998-2006: Raced go-karts with victories in numerous state and national championships
2006: Drove Formula Ford in Perth; won Formula BMW Asia Pacific scholarship; finished 3rd in Formula BMW Asian championship (2 wins, 12 podiums); finished 5th Formula BMW world final
2007: Competed in Italian Formula Renault 2.0 championship; selected for 2008 Red Bull junior team
2008: Won Formula Renault 2.0 West European championship (8 wins, 11 podiums); runner-up in Formula Renault 2.0 Eurocup series (6 wins, 7 podiums)
2009: Won British Formula Three championship (7 wins, 12 podiums); clocked fastest time at Red Bull Racing's end-of-season F1 test for rookies
2010: Test and reserve driver for Red Bull Racing and Scuderia Toro Rosso; runner-up World Series by Renault 3.5 championship (series record 8 poles, 4 wins, 8 podiums)
2011: Friday morning practice driver for Toro Rosso; elevated mid-year to HRT's F1 race driver (11 starts)
2012: Toro Rosso's full-time F1 race driver (20 races, 10 championship points, finished 18th)