The pair were on stage in St Thomas, Jamaica for Popcaan's Unruly Fest, a one day musical festival featuring some of the island's most prominent musicians.
Drake told the crowd: “This is something we worked on for a very long time. I just want to let everybody know finally, officially, 2019 Popcaan a sign to OVO."
The crowd erupted in response to the announcement.
Popcaan who was on stage as Drake shared the news then introduced Bounty Killer to the stage to perform.
Drake and Popcaan have collaborated in the past and publicly support each other's projects.
Popcaan featured on a version of Drake's hit Controlla, but was included in the album cut of the song.
Not everyone was happy to hear the news of the signing.
One Instagram commenter said: "When will Jamaicans stop allowing culture vultures to [own] them like slaves."
But a lot of Popcaan's fans seemed to be supportive of his move.
"Popcaan mi proud a yuh yute, you give every yute in Jamaica hopes and dream mi lion!" one fan commented on Instagram.
Another said: “People always wanna call someone a culture vulture but the question is what are you doing for your own culture? I mean Drake signed one of y’all own he helping make popcaan rich even Khaled linking with Buju going to help his career also worry about the people invading your land, buying your property and trying to take over, that’s a culture vulture not Drake. Y’all literally be worried about everything but your own damn life like bye. Even Bob Marley said majority of his supporters [were] overseas and in Europe! Didn’t they say in documentary that Bob didn’t wanna go back to Jamaica after his own people shot at him! Man go listen to Spice Black Hypocrisy.”