The former Koln boss, who was sacked from the newly-relegated Bundesliga side last month, held talks with the club on Thursday and will officially take charge on July 1
Wolves have confirmed the appointment of Stale Solbakken as their new manager.
The 44-year-old will officially take over the reins from interim boss Terry Connor at the end of the season.
Solbakken was sacked as manager of German outfit FC Koln in April and the club were subsequently relegated from the Bundesliga.
Wolves chief executive Jez Moxey, though, is pleased to have brought the Norwegian to the club.
"Following talks with Ståle Solbakken I am happy to confirm that he has agreed to become our new manager. He will be formally introduced to the media on Monday," Moxey told the club's official website.
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Wolves have already been relegated from the top flight this season, and will finish the season as the league's bottom-placed club, but the challenge at hand does not worry Solkbakken.
"I am delighted to be taking up the important challenge to manage Wolves. It's an exciting opportunity to manage a great club and I can't wait to get started," he said.
It still remains unclear what role, if any, Terry Connor will take under the new regime, but he is set to honour the terms of his agreement with the club and take charge of their final match of the season against Wigan on Sunday.
Solbakken has previous experience in English football, making six appearances for Wimbledon during the 1997-98 season.