McClaren has agreed a two-and-a-half year deal with the Championship club that sees him return to Pride Park 14 years after leaving to join Manchester United as Alex Ferguson's assistant.
In his previous spell at the club, McClaren assisted Jim Smith as they won promotion to the Premier League.
After his two-year stint at Old Trafford, McClaren went on to manage Middlesbrough, Twente, Wolfsburg, Nottingham Forest and England.
That experience is what attracted Derby president and chief executive Sam Rush to McClaren, and he is eager for him to get started.
"We are thrilled to announce Steve McClaren as our new head coach," he said. "Our goal is to have Derby County competing for a play-off place and beyond, and we feel with Steve and his team at the helm, we have a great opportunity to do so.
"Steve is a highly-qualified coach with all the skill-sets required to be a success here at Pride Park.
"He also has a network of contacts both on a European and global scale, and has also proved in the past that he can identify talent and develop it on the training ground.
"Steve was a driving force behind the club’s promotion under Jim Smith in the 1990s and you only have to look at his CV to discover what a hugely-talented coach he is.
"We are very much looking forward to letting Steve get on with the job in hand and helping Derby County move in the right direction."
The 52-year-old arrives after Clough was sacked following their 1-0 defeat to fierce rivals Forest at the City Ground on Saturday.
Clough had spent over four years at the club but was not deemed able to take them to the next level by the owners.
