The operation is to take on a multi-faceted menace from Islamist groups that he warned threatened France’s interests and citizens.
France led a military intervention in its former colony Mali last year, halting the advance of al Qaeda-linked fighters who had seized control of the northern two-thirds of the country in 2012.
The military operation succeeded in scattering the Islamist groups in Mali, and Paris is in the process of reorganising its deployment in the region, with its 1,700 soldiers in Mali being folded into a broader counter-terrorism force.
(READ MORE: West Africa leaders vow to wage "total war" on Boko Haram)
Under the new plan, some 3,000 French troops will now operate out of Mali, Burkina Faso, Niger and Chad – countries straddling the vast arid Sahel band – with the aim of stamping out an Islamist threat across the region.
“There are threats, notably from Libya. Military hardware has accumulated there, and without a doubt, terrorists are seeking refuge there,” Hollande said in Niger during a three-day trip that will also take him to Ivory Coast and Chad.
“We have, therefore, decided to put in place structures and measures that will allow us to confront this threat of terrorism in the Sahel,” he said.
Islamist fighters launched suicide attacks last year on Niger’s Somair uranium mine in the town of Arlit, which is operated by Areva, a supplier of uranium to France's nuclear power programme.
Twenty-four soldiers and one civilian were killed in the raids, which Niger President Mahamadou Issoufou blamed on fighters based in southern Libya.
Though weakened, Islamist fighters in Mali still carry out sporadic attacks there.
A French soldier was killed and several others injured by a suicide attack in northern Mali on Monday, and a Cambodian U.N. peacekeeper was injured by an improvised explosive device on Friday.
(READ MORE: Boko Haram exploits Nigeria’s slow military decline)
Hollande also spoke of the risks posed by the worsening Boko Haram insurgency in Nigeria, to Niger's south, where fighters carry out daily bombings, raids on villages and kidnappings.
Boko Haram is increasingly operating in Cameroon, where the group is blamed for a series of kidnappings this week. On Friday, Cameroonian state radio said militants killed one policeman and injured another in an attack in the town of Narki, in the country's north.
“Niger’s security, West Africa’s security is France’s security,” Hollande told French military personnel at a French air base outside the capital, Niamey.
“What can happen in Niger can touch our own security, our own interests, our own population. So while you are here ensuring the security of Niger, you are also ensuring the security of France,” he said.
The operation, dubbed Barkhane after the name of a kind of sand dune formed by desert winds, will be based in Chad and receive logistical support from bases in Senegal, Ivory Coast and Gabon.