The 56-year-old, who earned 35 caps during a 13-year playing career, replaces Waldemar Fornalik, who was sacked earlier this month following Poland's failure to qualify for the World Cup finals in Brazil next summer.
The Polish Football Federation (PZPN) confirmed Nawalka's appointment in a statement on their official website, adding: "The objective for the new coach is clear: to qualify for the Euro 2016 finals in France."
Nawalka, who had been in charge of Polish Ekstraklasa side Gornik Zabrze since 2010, represented Wisla Krakow and had a spell in the United States during his playing career.
After failing to progress out of their group at the Euro 2012 finals which they co-hosted, Poland have since slumped to 69th in the FIFA world rankings.
They finished fourth in European qualifying Group H for the 2014 World Cup behind England, Ukraine and Montenegro.