"Claudio Ranieri is now officially Inter's new coach," read a statement on Inter's official website. "The coach has signed a two-year contract with the club up until June 30 2013."
Ranieri, who becomes Inter's fourth coach since Jose Mourinho led them to the Champions League title 16 months ago, takes over from Gian Piero Gasperini who was sacked on Wednesday after three months in charge following a disastrous start to the season.
The Nerazzurri were beaten by city rivals AC Milan in the Italian Super Cup, defeated at home by Trabzonspor in their opening Champions League fixture and on Tuesday were beaten by Serie A newcomers Novara.
"Inter are a great team," Ranieri told Italy's state television Rai on Wednesday. "They have had a bad start to the season and I will have to talk to the team to understand why that was.
"I will have to bring enthusiasm and a change of impetus in order to wake up the team. I cannot promise that we will win this or that but I believe this team has a lot to give and we must prove it."
Ranieri, 59, has coached in Spain (Valencia and Atletico Madrid) and in England (Chelsea), as well as working with a host of Italian clubs including Napoli, Fiorentina and most recently Juventus and Roma, where he resigned in February following a poor run of results - a season after taking the Giallorossi to the brink of the title.
Despite his pedigree, Ranieri has never won a league title, often playing bridesmaid, though he won the Copa del Rey with Valencia in 1999 and the Coppa Italia with Fiorentina in 1996.
Last season Inter finished second in Serie A after claiming the scudetto for the previous five seasons.
The Italian's first game in charge will be at Bologna on Saturday before Inter face CSKA Moscow in the Champions League in midweek.
NEWS:Gasperini sacked by Inter Milan
