Powell, 44, has signed a deal to succeed Mark Robins, who left the club by mutual consent after just one game of the season on August 10.
Powell was dismissed from his post at The Valley in March after a poor run form left Charlton bottom of the Sky Bet Championship.
And he has now been charged with leading Huddersfield in the same division, with the Terriers fourth from bottom of the league with just a single victory from their opening five matches.
Sky sources learned that the former England international defender was set for talks and Powell arrived in West Yorkshire early on Wednesday afternoon.
After a meeting with the club's hierarchy that lasted around two hours, Huddersfield announced the news via their Twitter account and Powell will takeover from caretaker boss Mark Lillis, who is expected to return to his post as head of the club's academy.
Powell said: "I'm extremely happy. When I had my first interview and met the chairman and the chief executive, I was very impressed with their vision. I'm honoured to be the man chosen to lead Huddersfield forward.
"It was right to bring it to this point - an international break where players can recharge and the chosen applicant would have enough time with the team leading up to the next Championship game. I'm very honoured to be the one sitting in this seat right now.
"There's a good squad here already with lots of experience, potential and some good young players. The loan window opens so hopefully there'll be a chance to move a few players - some hopefully coming in and maybe some who need to go and play some football and get some experience.
"I'm sure we'll have a really competitive squad, then come January if we're able to enquire about players and bring players in permanently then we'll do that.
"Looking at the side, we just want to be a competitive side in the Championship. It's been a tough two seasons but we've stayed in the Championship. I think we just want to overachieve as such and move forward as a club that can really be a good competitive side. It's a tough league.
"You have to get used to the Championship pretty quickly. It's pretty relentless and pretty intense. I'm not going to make any promises - all I can say is that my team, whatever game they're playing in, they'll compete. They'll be a team full of character, honesty and play their football. They've got to make themselves, each other and the town proud."
Powell retired from professional football in 2010 when he took over temporary charge of Leicester, and then began a three-year spell in charge of Charlton, then in League One, the following year.
Powell, now the only black manager in the Football League, led the Addicks to promotion in 2012 and they finished their first season in the Championship strongly, in ninth.
But they toyed with relegation for the majority of last season and, after Powell was dismissed, managed to avoid the drop by six points under Jose Riga.