The Scottish boss steps into the Victoria Park hot-seat following the resignation of Neale Cooper two weeks ago.
Former Hull City and Preston manager Phil Brown had been a front-runner for the role but Pools have gone with Hughes, who has left the Scottish First Division to take over.
Hartlepool chief executive Russ Green told the club's official website: "We're convinced we've got the right man in place to take the club forward.
"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 have to have him in place."
Hughes, who has also previously managed Falkirk and Hibernian, will take charge for the first time at home to Coventry on Saturday.
Hartlepool currently sit rock-bottom of League One, having failed to win since September 1st.