The European arm of GM looked set to fall under the ownership of Magna, the Canadian auto parts giant, with funds provided by Russian backers.
But the abrupt U-turn decision by GM's management was in response to improving market conditions.
The German authorities had given its backing to an Opel sell-off.
News that Opel would remain as part of GM was met with anger in Germany. Angela Merkel's government has lent the car maker £1.3bn as a bridging loan.
Workers in the country were planning strikes in protest at today's announcement.
"We understand the complexity and length of this issue has been draining for all involved," said Fritz Henderson, president and CEO of General Motors.
"However, from the outset, our goal has been to secure the best long term solution for our customers, employee, suppliers, and dealers, which is reflected in the decision reached today.
"This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall's long-term future."
The latest GM plan entails 'total restructuring expenses of about 3 billion euros. GM will work with all European labour unions to develop a plan for meaningful contributions to Opel's restructuring.'
What that means for the European workers, including those employed by Vauxhall at Ellesmere Port and Luton, remains to be seen.
