Van Gaal's long-awaited appointment was confirmed alongside that of Ryan Giggs as his assistant, with the Welshman ending his glittering playing career as a result.
Van Gaal has signed a three-year deal and will take up his post when his duties as Holland national boss end after this summer's World Cup.
But although the tournament in Brazil will now command Van Gaal's immediate intention, the 62-year-old has alread y spoken of his determination to make an impact at United
Van Gaal said: "It was always a wish for me to work in the Premier League
To work as a manager for Manchester United, the biggest club in the world, makes me very proud.
"I have managed in games at Old Trafford before and know what an incredible arena Old Trafford is and how passionate and knowledgeable the fans are.
"This club has big ambitions
I too have big ambitions
Together I'm sure we will make history."
United immediately identified former Ajax, Barcelona, AZ Alkmaar and Bayern Munich coach Van Gaal as a top target after David Moyes was sacked in April.
His vast experience of both winning trophies and handling top-level players, combined with his availability, made him an ideal candidate.
Negotiations took time due to his commitments with Holland but, having voiced his desire to manage in England and spoken of his high regard for United, an appointment always seemed likely.
The Dutchman, previously linked with Tottenham, boasts a rich coaching pedigree having won league titles with each of his clubs as well as the Champions League with Ajax
He is also now in his second spell as Holland manager.
United executive vice-chairman Ed Woodward said: "In Louis van Gaal, we have secured the services of one of the outstanding managers in the game today.
"He has achieved many things in his career to date and Old Trafford provides him with a fitting stage on which to write new chapters in the Manchester United story.
"Everyone is very excited about this new phase in the club's history
His track record of success in winning leagues and cups across Europe throughout his career makes him the perfect choice for us.
"People know him as a larger than life character but I have also been extremely impressed by his intelligence, thoughtful approach to the role and his diligence
I'm looking forward to working with him."
United will hope the appointment can lift the club after a relatively poor 2013-14 season in which they finished seventh in the Premier League - their lowest position since 1990 - and failed to qualify for the Champions League.
The elevation of Giggs from his previous role as player-coach is also likely to prove popular.
The 40-year-old's future was thought to have been a key part of discussions with Van Gaal as the club were keen to retain his services in a coaching capacity.
Giggs, who retires as a player after an illustrious career which began in 1991, stepped in as interim manager for the final four games of last season following Moyes' exit.
Giggs, who made 963 United appearances and won 13 Premier League titles, said: "I am thrilled to have the chance to serve as assistant manager
Louis van Gaal is a world-class coach and I know I will learn a lot about coaching from being able to observe and contribute at such close quarters.
"Manchester United has been a huge part of my life and I'm delighted to be able to continue that relationship in such a key role."
In addition to Giggs, Holland goalkeeping coach Frans Hoek and coach Marcel Bout, a specialist in opposition scouting, will join the backroom staff
As yet there has been no announcement from United concerning the future of Moyes' former assistants Phil Neville and Chris Woods.
With Van Gaal now due to travel to Portugal for a training camp with Holland, he is unlikely to be presented by United at a news conference until after the World Cup.
When he arrives he is thought likely to make a number of changes to the squad.
Some will be necessary anyway, notably in defence, following the departures of Rio Ferdinand and Nemanja Vidic.
Club owners Joel and Avie Glazer are convinced Van Gaal is the right man for the job.
Joel Glazer said: "He has an outstanding pedigree as a coach, both as a man who motivates his teams to win trophies and as someone who believes in giving young players a chance to prove their worth
I am sure he will make a big impression on the club, the players and the fans."
Avie Glazer said: "Louis joins us at an exciting time and has already communicated some great ideas for how the club can move forward.
"The board is right behind him in his plans and everyone here is already looking forward to the start of next season."
Source : PA
Source: PA