In an official statement on the club's Twitter:
"Manchester United is delighted to announce that Louis van Gaal has been appointed as the club's new manager."
The Dutchman has signed a three-year contract and will take charge at Old Trafford after leading the Netherlands at this summer's World Cup in Brazil.
The 62-year-old has won titles with Ajax, Barcelona and Bayern Munich.
United sacked David Moyes in April only 10 months after he succeeded Sir Alex Ferguson, who was in charge for 26 years before retiring last summer.
Giggs, 40, took charge on an interim basis for the final four games of the season.
He met Van Gaal in the Netherlands last week to talk about his future at the club as a member of the coaching staff and as a player.
United finished seventh in the Premier League, after a title defence that featured one-sided defeats by Manchester City, Liverpool and Chelsea.
They have failed to qualify for the Champions League for the first time since 1995-96 and are out of European football entirely for the first time in 25 years.
Club legend Giggs, Real Madrid boss Carlo Ancelotti and Borussia Dortmund manager Jurgen Klopp had been linked to the post after Moyes's dismissal, but Van Gaal is the man trusted to restore the club to the top of the domestic and European game.
The new United boss is expected to be given significant transfer funds to bring in new players.
Known for his teams' attacking style and his demands of discipline from his players, he came to prominence when he guided a young Ajax team, featuring Clarence Seedorf, Edgar Davids and Patrick Kluivert, to a surprise Champions League final victory over AC Milan in 1995.
He won two Spanish league titles with Barcelona, but failed to qualify for the 2002 World Cup with the Netherlands.
Van Gaal returned to Barca, but left the Catalans only three points above the relegation zone in La Liga when he was dismissed after half a season.
He revived his reputation back in his homeland, leading AZ Alkmaar to only the second Dutch title in their history, and then took Bayern Munich to the German title and the Champions League final in 2010 - his first season in Bavaria.
He was dismissed after results tailed off in the following campaign, but laid the foundations for Bayern's current domination of German football by promoting young players such as midfielder Thomas Muller.
He has a strong relationship with United striker Robin van Persie, who he installed as Netherlands captain in June 2013.
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