Mancini had shown an early interest in taking over the national side and was ready to sever his lucrative contract with Zenit Saint Petersburg.
After his three-year contract was officially terminated by mutual consent on Sunday, the 53-year-old flew immediately to Rome on Monday morning and signed his new deal later in the day.
His task will be to rebuild and qualify Italy for the 2020 European Championships, with his first match in charge a friendly on May 28 against Saudi Arabia in Switzerland. Italian FA commissioner Roberto Fabbricini said Mancini had proved his "great desire" to become the new Italy coach.
The new coach's first press conference will be held Tuesday at 12:00 (1000GMT) at the national team's training centre at Coverciano near Florence.
"It went the way we wanted, we are happy and Roberto is happy," Fabbricini told journalists after the contract was signed in Rome.
"We'll explain everything about the contract tomorrow (Tuesday), he's very happy and so are we." He will also prepare Italy for a friendly against France on June 1 in Turin which could be the final international game for goalkeeping legend Gianluigi Buffon.
Mancini's first squad will be eagerly awaited and is expected to see the return of Nice forward Mario Balotelli, who he coached at Inter Milan and Manchester City. Balotelli has not played for Italy since the 2014 World Cup.
In Mancini, Italy have a coach with a solid track record as a title-winner.
He led Manchester City to their first English league title in 44 years in 2012, and won three Serie A titles with Inter Milan. He also won Italian Cups with Inter, Fiorentina and Lazio. Since leaving England in 2013, Mancini also managed Galatasaray, who he lead to a Turkish Cup title, and Inter Milan before joining Zenit in June 2017.
Zenit finished fifth in the Russian Premier League, failing to qualify for the Champions League but qualifying for the Europa League.
Mancini, a former Lazio and Sampdoria forward, had said coaching the national side would be "extraordinary" and would fulfil his dream of winning the World Cup.
He never became a regular with Italy during his 10-year international career, during which he won 36 caps and scored four goals.
He reached the semi-finals of Euro 1988, and was in the squad that finished third in the 1990 World Cup on home soil.
Luigi di Biagio had stepped up from the Under-21s to take interim charge of the senior national side but will now make way for Mancini.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.