The League Two side made the announcement on Thursday, with Hughes replacing Derek Adams, who was sacked by the Bantams earlier this month, following a run of nine victories in 37 matches.
Bradford are currently 15th in England's fourth-tier, 11 points above the relegation zone.
Former Manchester City, Blackburn and Stoke boss Hughes will take charge of his new side on Saturday at home to Mansfield.
"I am really pleased to be here and am looking forward to the role, and the job in hand. It has been an exciting few days", Hughes said after his appointment.
"It is maybe a little bit of a surprise that I have come in, but do not be put off by that!
"I am here for a reason: to make Bradford City a team people want to come and watch - and are proud to watch.
"The supporters come in their numbers, and that is the thing I have missed since being out of management. I am looking forward to the matchday, getting that adrenaline flowing and interacting with the crowd.
"Certainly, from now until the end of the year, we just want to finish strongly and see where that takes us.
"We want to move the club and everybody with it forward, and hope we can have the success everyone wants."
Hughes takes the reins at the West Yorkshire club having previously been in the dugout more than three years ago.
The 58-year-old was sacked by Southampton in December 2018, following a 2-2 home draw against Manchester United at St Mary's.
Bradford's chief executive officer Ryan Sparks has claimed it is "without doubt one of the most significant appointments in the history" of Bradford.
Sparks also added that Hughes "will be provided with the tools he requires in order to achieve our goals - be that in coaching, recruitment, sports science, medicine or any other area."
The club are yet to confirm Hughes' coaching staff, but he could be joined in Yorkshire by ex-assistant Mark Bowen.
Former Reading boss Bowen, has previously been on the touchline alongside Hughes, at Wales, Blackburn Rovers, Manchester City, Fulham, Queens Park Rangers, Stoke City and Southampton.