The 43-year-old must still confirm the terms of his contract but will be allowed to choose his own support staff, an unprecedented move from the federation.
"The decision to choose Siasia is in the best interest of Nigerian football," the NFF technical committee member Chris Green told reporters.
Siasia was coach of the Nigerian Olympic team, which won the silver medal at the 2008 Beijing Games and the Under-20 side that finished runners-up to Argentina at the 2005 World Youth Championship.
He had been the favourite for the job after the Swede Lars Lagerback turned down an offer to continue after the World Cup finals.
But Siasia's appointment was delayed because of political in-fighting in the Nigeria Football Federation, which led to a brief suspension from FIFA.
It was decided two weeks ago that both Siasia and Keshi, who captained the Nigerians at the 1994 World Cup finals, would be interviewed by the federation before a final decision was made.
Siasia will take up the post from Dec. 1 but will travel with the team for a friendly in Iran on November 17. The squad for that game was chosen by caretaker coach Austin Eguavoen.
His first objective will be to qualify Nigeria for the 2012 African Nations Cup finals.
Siasia, who as a player won the French championship with Nantes, has been working with Nigerian club Heartland.
His playing achievements also include winning the 1994 African Nations Cup with Nigeria and competing at the 1994 World Cup in the U.S.
