Antonio Conte is the new coach of Italy with a two-year contract that will take him through the 2016 European Championship.
The former Juventus manager will replace Cesare Prandelli, who resigned after Italy were knocked out of the 2014 World Cup in the group stage. He is now the manager of Galatasaray in Turkey.
Carlo Tavecchio, the new president of the Italian Football Federation (FIGC), opted for Conte after the former midfielder won three Serie A titles in as many years with Juve.
An FIGC statement read: "President Tavecchio and Antonio Conte spoke directly by phone this morning to define the final aspects of the collaboration that will bind Antonio Conte to the FIGC until July 31, 2016.
"The new coach shared in the president Tavecchio's vision to revitalise the national team and the project of training of new Azzurri players, and has a strong commitment towards the technical sector as coordinator of the youth teams."
Conte's appointment had been in the works for weeks, but the last stumbling block fell earlier Thursday with sponsors Puma announcing they will cover the shortfall in his salary.
"We will support the FIGC," said Puma in a statement. "Our objective is to be successful together."
Their funds will bridge a gap of almost 3 million euros between what Conte was earning at the Bianconeri and the maximum the FIGC are willing to pay for the new coach -- the same salary Prandelli was earning.
The FIGC also outlined certain bonuses Conte can earn during his tenure.
"The contract between the FIGC and Antonio Conte provides compensation in line with the cost of the previous management, with a bonus for qualifying for Euro 2016, an added bonus in case of improvement of at least five places in the FIFA rankings, and a third bonus in case of participation at the Euro 2016 finals."
Conte will reportedly be given total responsibility for the senior Italy squad, including the organisation of training camps, as well as for the under-21 squad, with almost daily contact with club coaches and Italian players.
Italy start their Euro 2016 qualifying campaign against Norway in Oslo on Sept. 9 .
Conte, a midfielder with Lecce and Juventus, enjoyed three successful years as a manager in Turin, guiding Juve to three consecutive Serie A titles and once into the last 16 of the Champions League.
He served a four-month FIGC suspension from football between August and December 2012 for failing to report his knowledge of attempted match-fixing during his time as the manager of Siena.