Zenga, whose previous managerial stint was in the Middle East with Al-Shaab last season, has managed sides including Steaua Bucharest, Red Star Belgrade, and Catania, Palermo and Sampdoria in Serie A during an 18-year coaching career.
"We're delighted to appoint Walter as the new head coach of Wolves. Walter is a hugely passionate personality who lives for football and is fiercely determined to succeed in everything he does," Wolves director Jeff Shi said in a statement.
"We are looking forward to working with him, and supporting him in the shared aim of trying to help Wolves achieve promotion back to the Premier League."
The 56-year-old, who kept five clean sheets for hosts Italy when they finished third in the 1990 World Cup, will formally take charge of the squad on Monday.
(Reporting by Shravanth Vijayakumar in Bengaluru; Editing by John O'Brien)
