The 56-year-old replaced Sami Hyypia who quit last week following a run of one win in 18 games which has left Brighton 21st in the standings, one place above the relegation zone.
"Chris has an excellent record in coaching and management," chairman Tony Bloom told the club website.
"Chris is also a manager who has a track record for developing talent at all levels from academy upwards and will embrace the work we've been doing at the club in this area in recent seasons."
Hughton played most of his career as a full back for Tottenham Hotspur and won 53 caps for Ireland.
He led Newcastle back into the Premier League in 2010 but was sacked the following season.
Hughton managed Birmingham City in 2011-12 before moving to Norwich City and leading them to 11th place in the Premier League in 2013.
He left Norwich in April with the club 17th in the table and they were relegated at the end of the campaign.
(Reporting by Ed Osmond; editing by Toby Davis)
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