The 36-year-old joins the Tangerines following Ian Holloway's departure to Crystal Palace, agreeing a rolling one-year contract as he bids farewell to the troubled League One side
The Tangerines had expected to announce the appointment on Tuesday, only for the deal to stall after the two clubs struggled to agree a compensation package. Joining Appleton at Bloomfield Road will be assistant manager Steve Thompson and first-team coach Ashley Westwood.
"Getting the opportunity to come to a club that has had a lot of success over previous seasons is a big part of wanting to be here," the new boss declared at his first press conference.
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The 36-year-old was reported to be one of the two candidates who Karl Oyston had lined up to take over as the next Tangerines' boss, with the other unnamed candidate currently a free agent, with the Championship club aiming to replace Holloway swiftly.
Appleton moved to Fratton Park on a three-and-a-half-year deal last November from his role as assistant head coach at West Bromwich Albion but severe financial jeopardy ensured relegation to the third tier.
He leaves Portsmouth in 15th in League One, seven points off the play-off places, and joins Blackpool with his new team 12th in the second division.