Former Falkirk and Hibernian boss Hughes leaves Livingston to take charge of npower League One's bottom side, starting with the visit of Coventry this weekend.
The 48-year-old succeeds Neal Cooper, who resigned last month, and inherits a squad nine points from safety and without a win in 16 matches.
Ex-Hull and Preston manager Phil Brown had been widely touted with the role in recent days.
Micky Barron served as caretaker manager following Cooper's departure and will stay on as part of the first-team set up alongside Hughes, while remaining as reserve team boss.
"We're convinced we've got the right man in place to take the club forward," Hartlepool chief executive Russ Green told his club's official website, www.hartlepoolunited.co.uk.
"Everybody knows that this appointment was a crucial one for the club so we have taken our time, assessed our options and John is the choice we are all extremely happy with.
"He has a vision for the football club, he has a passion and a drive to succeed and we hope that the fans will be as excited as we are to have him in place."
In a statement on www.livingstonfc.co.uk, the Irn-Bru First Division outfit's director of football, John Collins, said: "I brought John Hughes in with me when I joined Livingston earlier in the year because of his professionalism and passion for the brand of football that I want Livingston to play.
"I'm naturally disappointed that he has attracted the interest of another club, but not surprised, and I wish him well at Hartlepool."
The former Scotland international midfielder added: "While John leaving us is a blow, I'm as determined as ever to continue the job we've started together at Livingston.
"There's progress being made all the time, from developing our youngest kids to improving the first team squad, and with or without John that work will continue."