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Appleton moves to Bloomfield Road as successor to Ian Holloway, who ended a highly-successful three-and-a-half year stint with the Seasiders to join npower Championship counterparts Crystal Palace at the weekend.
The 36-year-old former Manchester United youngster had his playing career cut short by a serious knee injury but has impressed in his first managerial role, earning plaudits in difficult circumstances at Portsmouth despite overseeing the financial stricken club's relegation to League One last season.
Appleton previously worked at West Brom as assistant under Chelsea boss Roberto Di Matteo and England manager Roy Hodgson.
Blackpool, who led the table in the opening weeks of the season,
lie 12th in the Championship after earning a first win in six outings at Sheffield Wednesday on Tuesday night.
Blackpool confirmed the news on their official website on Wednesday evening, where it was confirmed Appleton has agreed a one-year rolling contract.
This would appear to be a similar type of deal to the one Holloway suggested was one of the main reasons for his move to Selhurst Park, where he has signed for four-and-a-half years.
Ashley Westwood also makes the move north from Portsmouth and will serve as first team coach.
Steve Thompson, who served as caretaker boss in the two games since Holloway's departure, will remain as assistant manager.
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Blackpool featured memorably in the Barclays Premier League two seasons ago and lost in the Championship play-off final last term, a recent pedigree which Appleton cited as a determining factor in the move.
"Getting the opportunity to come to a club that has had a lot of success over previous seasons is obviously a big part of wanting to be a part of it," he told www.blackpoolfc.co.uk.
"I met a few of the coaching staff a little bit earlier, we just had a bit of a chat and I got a feel for the place. I'm just desperate to meet the players now and crack on with the job."
Appleton assured fans that Blackpool's style of play is not set for any drastic overhaul.
"As a new manager coming in you want to bring a few ideas to the new football club and the team but I think they've got to be small steps in doing that because if it's not broken then don't mend it, just tweak it a little bit," he added.
Portsmouth confirmed that Guy Whittingham will take temporary charge of Saturday's League One match with Bury.
A statement on their official website read: "Portsmouth Football Club can confirm that we reluctantly gave Michael Appleton permission to speak to Blackpool and that he has since agreed to become their new manager.
"Michael has done an incredible job in very difficult circumstances at Pompey and we have done what we can to keep him at Fratton Park.
"However, he is an ambitious manager with a growing reputation and has deservedly attracted interest from other clubs.
"First-team coach Ashley Westwood has also left Pompey to link up with Appleton at Blackpool.
"We thank them both for the work they have done here and wish them well for the future."
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