The 62-year old has won domestic titles and cups with three countries, as well as the UEFA Champions League,
Van Gaal will officially join the team after the FIFA World Cup, where he will be managing The Netherlands.
Meanwhile, Ryan Giggs, who was the club's interim manager, after the sacking of David Moyes, has been appointment assistant manager.
Ryan Giggs, English football's most decorated footballer and the United player with the most appearances in the club's history, has been appointed as assistant manager. Ryan took charge of the first team for the last four matches of the 2013/14 season.
"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," said executive vice-chairman Ed Woodward.