The 52-year-old former international replaces Cho Kwang-rae, who was sacked two weeks ago following South Korea's shock 2-1 defeat to Lebanon in Asia's 2014 World Cup qualifiers.
The Korean Football Association had been expected to name a foreign coach and were linked with Sven-Goran Eriksson, Senol Gunes and Guus Hiddink, who led the side to the semi-finals of the 2002 World Cup on home soil.
Choi guided Jeonbuk to the K-League title in two of the last three seasons and his side lifted the Asian Football Confederation's Champions League trophy in 2006. Jeonbuk were also runners-up in the 2011 competition.
The KFA asked former national team coach Cho to resign after the stunning loss to Lebanon provoked a storm of criticism at home and stalled the Koreans' progress to the fourth round of 2014 World Cup qualifying.
The east Asian side remain top of Group B on goal difference with three wins, one loss and a draw, and need only a point at home to 100th-ranked Kuwait in their final match in February to progress.
Lebanon were ranked 146th in the world when they defeated the Koreans in November.
Hwangbo Kwan of the KFA's technical committee said Choi's name had been at the top of the list.
"He was always the first option for our technical committee," said Hwangbo, adding that the lack of time to integrate a new coach into the set-up before the Kuwait game was a key factor.
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