The decision was taken here at a Board of Control for Cricket in India's (BCCI) special general meeting.
"The BCCI unanimously decided that the Indian cricket team will participate in the upcoming ICC Champions Trophy. The All-India Senior Selection Meeting will be held May 8 in New Delhi to pick the team," a BCCI statement said.
The Board unanimously authorised current joint secretary Amitabh Choudhary to negotiate with the ICC on behalf of the BCCI.
The negotiations would take place "in the best interest of the BCCI while keeping its legal options open", the statement added.
Cricket Association of Bengal President and former national captain Sourav Ganguly, acting BCCI President C.K. Khanna, BCCI acting Secretary Amitabh Choudhary and Indian Premier League Chairman Rajiv Shukla attended the meet.
Earlier, after the International Cricket Council (ICC) had overwhelmingly voted to drastically reduce the BCCI's share of revenue at its board meeting, the BCCI officials contemplated a pull out from the Champions Trophy in England and Wales.
But on Thursday, the Supreme Court-appointed Committee of Administrators (COA) asked the BCCI to announce a team for the upcoming event immediately despite the problems with the ICC.
The Indian board stands to receive $277 million less revenue than the previous scheme over the next eight years under the sweeping changes approved by all ICC members except India.