Conte has been given a contract until July 2016, the Italian football federation (FIGC) said on its website.
Conte won three consecutive Serie A titles with Juventus before he unexpectedly left last month amid speculation the club's ownership had not guaranteed him the financial resources he believed were necessary for success in the Champions League.
Conte, a former Juventus captain and Italy international during his career as a combative midfield player, coached Siena, Atalanta and Bari before taking over at Juventus in 2011 and leading then to the Serie A title in his first season.
He was forced to sit out the first three months of the 2012-13 season, when the Turin club again won the title, after being found guilty of failing to report a match-fixing incident involving Siena when he was their manager in 2010-11.
Conte, who is known for his fiery temperament, has always denied knowledge of match-fixing.
Juventus finished the 2011-12 season unbeaten in his first year in charge, having come a lowly seventh in the previous two terms, and the club amassed a record 102 points in the 2013-14 season to become the first Italian side to break the 100-point barrier.
However, he failed to achieve similar success in Europe.
Juventus lost in the Champions League quarter-finals in 2013 and were eliminated in the group stage in 2014, when they went on to reach the semi-finals of the Europa League.
Italy will be hoping that by far the nation's most successful club manager in recent years can achieve similar results for a national team which has been eliminated at the group stage in the last two World Cups.
In Brazil, Cesare Prandelli's side lost 1-0 to Costa Rica and Uruguay after raising expectations with a 2-1 victory over England in their opening match.
Italy have won the World Cup four times, most recently in Germany in 2006 under Marcello Lippi.
Conte's first task will be to qualify the team for the 2016 European Championship in France. Italy reached the final of the last European Championship in Poland and Ukraine but lost 4-0 to Spain.
He will also be responsible for the organisation of Italy's youth teams.
The FIGC did not spell out the financial terms of his appointment but said Conte's base salary would be in line with Prandelli's and he will receive a bonus if Italy improve their FIFA ranking by at least five places.
Conte will hold his first official news conference as Italy coach next Tuesday.
(Reporting by Gavin Jones, editig by Ed Osmond)
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