Eriksson, who has previously managed club sides including Lazio, Benfica and Manchester City, as well as the international sides of Mexico, Ivory Coast and England, will begin work at the Walkers Stadium immediately by joining the club on their tour of Thailand.
His first game in charge of the club will be the friendly match against the Thailand national side on Saturday October 9th and his first competitive fixture will be against Hull City in the npower Championship on Saturday October 16th at the Walkers Stadium.
Eriksson has achieved incredible success as a manager, winning the UEFA Cup and European Cup Winners Cup, along with the respective league titles in Sweden, Portugal and Italy. He has also managed in two World Cups with England, achieving respectable quarter-final finishes in 2002 and 2006, along with a quarter-final finish in Euro 2004.
During Eriksson's period as England manager, he led the Three Lions from 17th place in the FIFA rankings to 5th place at the point of his departure in July 2006.
Eriksson has previously managed at the Walkers Stadium, leading England to a 2-1 win in a friendly match against Serbia and Montenegro in 2003.
Leicester City owner, Aiyawatt Raksriaksorn, was thrilled to be able to announce Eriksson as the club's new manager.
He said: "We are delighted to welcome Sven to Leicester City Football Club. This is a great day for everyone associated with the club and we are very proud to have Sven as our new manager."
He added: "In Sven, we have a world-class leader for our team and for our club. His record within the game is tremendous and he has the ability, knowledge and pedigree to take this club forward and in to the Premier League."
Club Chairman, Milan Mandaric, said: "This is another example of the great support shown by our new owners. Their ambition for the club has been emphasised with this landmark appointment of Sven as the new manager."
On joining Leicester City, Eriksson said: "I am extremely pleased to be the new manager of Leicester City. This challenge provides great motivation for me and I look forward to working with the players, meeting the supporters and hopefully achieving great success for Leicester City."
He added: "Leicester is a club with a rich heritage and is a proud sporting city. I hope that together we can look forward to adding to that history with the accomplishments I plan to make."