The appointment comes a month after Fraga defeated another Red Bull protege Liam Lawson to the 2020 Toyota Racing Series crown in New Zealand.
The Brazilian driver enjoyed a race-winning campaign in the F3 Regional European Series last year, finishing as the top non-Prema runner in third.
The 21-year-old also has prior experience in esports, with victories in the inaugural FIA Gran Turismo Nations Cup and McLaren Shadow in 2018 being the highlights of his gaming career.
He had already been signed on to drive alongside Niko Kari and David Schumacher at Charouz in the second season of the new FIA F3 series in 2020.
Red Bull officially revealed its young driver roster in January, but has since added FIA F3 contender - and now Carlin F2 racer - Jehan Daruvala to the programme and also recruited Sergio Sette Camara as the official reserve driver of its two Formula 1 teams.
Fraga joins an expanded Red Bull junior roster that includes Super Formula driver Juri Vips, Yuki Tsunoda, 14-year-old American driver Jak Crawford as well as his TRS title rival Lawson.