Berizzo replaces Martin Lasarte, who was sacked in April after Chile missed out on the finals that begin in Qatar in November.
The 52-year-old Berizzo began his coaching career as an assistant to then Chile manager Marcelo Bielsa in 2007.
He has coached since at Argentine club Estudiantes, Sevilla and Athletic in Spain, and he most recently led Paraguay during most of their unsuccessful bid to qualify for Qatar.
He was given a four-year contract in Santiago and will be charged with getting Chile back on track after missing out on both the World Cup in Russia in 2018 and this year’s tournament.
His first games in charge will come next month when Chile play South Korea and Tunisia.
“Dear fans of our national football team, we have a coach and he is Eduardo Berizzo,” said Pablo Milad, the president of the Chilean Football Federation. “He knows our football and he has vast international experience. We wish him lots of luck.”
As a player Berizzo enjoyed spells with Newell’s Old Boys, Marseille, Atlas, River Plate and Celta de Vigo between 1988 and 2006.