The 69-year-old, who becomes the country's oldest coach, will be assisted by Ruud Gullit. Advocaat will leave Turkish side Fenerbahce at the end of the current season to lead the national team for a third time.
Advocaat replaces Danny Blind, who was sacked in March after a 2-0 defeat in Bulgaria left the country fourth in their qualification pool midway through the campaign, six points behind leaders France.
The Dutch, World Cup runners-up on three occasions, are in danger of missing out on a place in Russia after also failing to qualify for Euro 2016.
“I know what is needed to get the squad going again,” Advocaat told De Telegraaf on Wednesday.
“You don’t have a lot of time to slowly start turning it around. It is about getting energy back into the squad and organising a clear playing style. That’s what I’ll be doing."
Advocaat was reportedly not the first choice of the KNVB.
According to local media Louis van Gaal, Ronald Koeman, Frank de Boer, Henk ten Cate and German coach Roger Schmidt all turned the job down.
Ten Cate, now coaching in Abu Dhabi, ran into a media storm last month after initially accepting the post but then changing his mind, saying in a statement that he felt he did not have the full support of the KNVB.
Advocaat is likely to miss friendlies against Morocco on May 31 and the Ivory Coast on June 4 and is set to arrive just days before a World Cup qualifier at home to Luxembourg on June 9.
The Dutch squad will assemble on May 27 for a training camp in Portugal before going onto Agadir for the match against Morocco and then returning home for the next two internationals, both in Rotterdam.
(Reporting by Mark Gleeson; Editing by Peter Rutherford)
