Kovac takes over the reins following the dismissal of Florian Kohfeldt, who guided the Wolves to safety and a 12th-placed finish in 2021/22.
It is the Berlin-born tactician's first coaching role since leaving French Ligue 1 side Monaco, where he was employed from July 2020 until January 2022, having previously guided Bayern to a Bundesliga and DFB Cup double in 2018/19.
"I'm a child of the Bundesliga and I'm very keen and motivated to start another successful chapter with the Wolves," Kovac said on his appointment.
Kovac is Wolfsburg's third head coach in the space of a year. Last summer, Mark von Bommel was installed as a successor to Oliver Glasner, before Kohfeldt was charged with steadying the ship following a disappointing start to the 2021/22 campaign. He left the club by mutual consent in May following a post-season analysis with the Wolfsburg board.
"When filling the coaching position, it was important to me that we not only find someone quickly, but above all engage a coach who can develop Wolfsburg in the long term and bring us forward," said sporting director Jörg Schmadtke.
"So I'm very pleased that we were able to convince Niko of our path and win him over for VfL. He stands for consistent and success-oriented work and I am convinced that the team will bear his signature in the years to come."
Watch: Kovac's top 5 Bundesliga goals
A central midfielder in his playing days, Kovac had spells at Hertha Berlin, Bayer Leverkusen, Hamburg and Bayern, among others, before hanging up his boots in 2009. His first foray into coaching was at the Red Bull Salzburg reserves, before taking charge of the Croatia national team in 2013 and helping guide the team to the FIFA World Cup in Brazil the following year.
He was appointed Eintracht Frankfurt head coach in March 2016 and led the team to consecutive DFB Cup finals in 2017 and 2018, winning the latter 3-1 against future employers Bayern.
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