The former England midfielder, out of work since leaving Notts County in April 2011, replaces Michael Appleton at Bloomfield Road and will count son Thomas among his squad.
He said: "It's great to be here. Considering I've watched the team play for the last 14 months, it's strange sitting here as the manager, having obviously watched Blackpool as a fan as well as watching my son play.
"I'm over the moon though and delighted, it's great to be back on the training ground and great to be involved with, and in charge of, a great bunch of lads."
Ince joins a club 10 points adrift of the Championship play-off places and just five above the bottom three, and his immediate aim is to secure enough points for safety.
He told Sky Sports News: "We've got to have a short-term plan to get as many points as we can. once we get to 50, 52 points we can start looking upwards.
"We're under no illusions as to how tough the job is going to be, but we've got fantastic spirit, fantastic fans and a great talent in the squad.
"Promotion would be a fantastic achievement, but there's another 13, 14 clubs in the Championship who've been in the Premier League and are saying exactly the same thing."
Blackpool managed to keep Ince Jnr in January despite interest from Reading and Liverpool, but the England U21 winger's deal is up in the summer.
And his father said: "He's under contract at the moment. He loves playing for his fans and team-mates at Blackpool. If that changes in the summer, we'll address it."