The former Liverpool defender replaces Oscar Garcia at the AMEX Stadium, with the 40-year-old having earned his managerial stripes at German club Bayer Leverkusen
The former Liverpool defender cut his managerial teeth at Bayer Leverkusen and replaces Oscar Garcia, who resigned following the club's play-off semi-final defeat to Derby County.
"I am absolutely thrilled by this appointment; Brighton & Hove Albion are an ambitious club and I am very pleased to have been given this opportunity,” he told the club's website.
"I've held extensive talks with the chairman Tony Bloom and chief executive Paul Barber. I have looked at the club from top to bottom and I am very impressed by what I've seen at all levels.”
Hyypia retired from playing in 2011 having played more than 700 senior games and says he is relishing the chance to try and get the Seagulls into the Premier League.
He continued: “The chairman is ambitious and for me that is absolutely key. I am now looking forward to the challenge ahead and our aim is to take the club forward to the next level.”
Chairman Tony Bloom added: "We are very excited to have appointed Sami as our new manager. He has already had a distinguished career in the game, having played and managed at the very top.
"As we have said previously we had a wealth of very high calibre applicants. Paul and I undertook an extensive and diligent evaluation of the contenders and Sami was the one who emerged as our number one choice.
"I would like to thank the fans for their patience during this time. I know the fans were keen to see a new manager in place quickly, but it was vital to take our time. I am extremely confident that Sami will be a big success at Brighton, and I am sure the fans will share our delight at his appointment."