Last week, the Dutchman announced he would step down as national coach of Russia when his contract expired on June 30.
"The Turkish Football Federation chairman and vice chairman met Mr Hiddink in Amsterdam yesterday and agreed on a deal of four years, of which two years will be optional," the federation said in a statement.
Hiddink is one of the most respected coaches in world soccer and has been in charge of Russia since 2006, taking them to the semi-finals at Euro 2008 but failing to successfully negotiate qualifying for this year's World Cup finals in South Africa.
Turkey, Euro 2008 semi-finalists, have also failed to qualify.
Hiddink took the Netherlands to the World Cup semi-finals in 1998 and repeated the feat with co-hosts South Korea in 2002, before helping an unfancied Australia to reach the knockout stage in 2006.
During his spell with Russia, Hiddink also managed Premier League side Chelsea for a few months and helped them to win the FA Cup last season.
The 63-year-old, who had a brief spell in Turkey in 1990 coaching Fenerbahce, replaces Fatih Terim who stepped down last October.
Terim had coached Turkey since 2005.
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