The Barclays Premier League club have announced that Van Gaal, current coach of the Holland national side, will take charge at Old Trafford after the World Cup with Ryan Giggs as his assistant.
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."
The vastly experienced Van Gaal was quickly identified as the club's top target after David Moyes was sacked in April.
The appointment of Giggs, 40, ends speculation over the future of the club's most decorated player. Giggs had served as interim manager for the final four games of last season.
Moyes, appointed only last year following the retirement of the long-serving Sir Alex Ferguson, paid the price for a poor season.
United, champions in 2013, could only finish seventh in the Premier League this year and therefore failed to qualify for European football.
Van Gaal will therefore inherit a squad that has slipped to a low ebb but he boasts a rich coaching pedigree and plenty of experience of handling big-name players.
He won three Dutch titles and the Champions League with Ajax in the 1990s before winning La Liga twice in charge of Barcelona. Further titles have followed, back in Holland with AZ Alkmaar and then in Germany with Bayern.
During his career he has also had two spells in charge of Holland, the second of which ends after this summer's World Cup in Brazil.
In January Van Gaal made public his desire to work in the Premier League.
He was linked with Tottenham but, due to his impending availability, he immediately became a favourite for the United job after Moyes' departure.
His ongoing work with the Dutch side meant discussions with the club took time, while the future of Giggs and other backroom staff was also thought to be a key topic of negotiation.
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.
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