The Dutch football association has revealed he will replace Louis van Gaal after the World Cup, with Danny Blind and Ruud van Nistelrooy to become his assistants
The 67-year-old has long been expected to succeed Louis van Gaal at the Oranje helm, with the former Bayern Munich boss set to leave the post after the tournament in Brazil this summer.
The Dutch football association (KNVB) has now confirmed that Hiddink has signed a two-year deal as head coach of the team, meaning he will lead them through qualifying and potentially the finals of Euro 2016 in France.
The ex-Chelsea manager will be joined by assistant coaches Danny Blind and Ruud van Nistelrooy, with Blind having also agreed a deal to succeed Hiddink after the 2016 finals until the 2018 World Cup.
"It's an honour to return as coach of the national team. With Danny Blind and Ruud van Nistelrooy we've got a strong team with a lot of knowledge and experience," he told the official KNVB website.
"For me it's great that I can ready my own successor. In this way the football vision for the national team of Holland is guaranteed for the long term. It's a great benefit for the national team and the KNVB."
Bert van Oostveen, director of the KNVB, added: "With Hiddink we've got a Dutch coach with a lot of international experience and success. He has proved himself as a great coach with the clubs and national teams he's worked with. We're also very happy with the rest of the technical staff."
Hiddink, who left his post as Anzhi Makhachkala boss last summer, will begin his spell with the Netherlands side from August 1 this year.
He led Netherlands to fourth place at the 1998 World Cup finals before repeating the feat with South Korea four years later. He also guided Australia to their best-ever finish in 2006 as they reached the knockout phase, and took Russia to the semi-finals of Euro 2008.
Question marks remain over the future of Van Gaal, meanwhile, with the 62-year-old having repeatedly hinted at a desire to join a club in the Premier League, with Tottenham consistently rumoured as a possible destination.
Recent reports have also begun linking Van Gaal with the Manchester United manager role, as the English champions consider the possibility of replacing David Moyes following the Scot's disastrous first season at the club.