Coyle, who was sacked by Bolton in October, is understood to have signed an incentivised 12-month rolling contract to succeed Roberto Martinez.
A statement on Wigan's website read: "Wigan Athletic are delighted to confirm the appointment of new manager Owen Coyle.
"Following discussions with the club on Friday afternoon, the 46-year-old has now agreed terms to become the 37th manager of the club and begins work immediately."
Former England boss Steve McClaren was a frontrunner for the job but chairman Dave Whelan has opted for the experience of a man who secured promotion from the Championship with Burnley in 2009.
Speaking to Sky Sports News before official confirmation came, Whelan said: "We've agreed in principle a deal with Owen. We're just talking to his agent at the moment about getting it finalised.
"He's done it all before by taking Burnley to the Premier League. He didn't have quite the same success at Bolton but sometimes these things go against you.
"I've got to say of all the candidates to apply I thought he was the best.
"Steve was a very, very good candidate. It was a very difficult choice between three or four who applied - there were over 40 applicants."
Wigan midfielder James McArthur reacted favourably to the news before it was official, writing on Twitter: "Happy with the new appointment in Owen Coyle, another Scot. Hopefully everyone can get behind him and the team for new season."
Coyle's priority will be to secure an immediate return to the top flight but he will also have Europa League football to contend with for the first time in the club's history.
His first competitive match in charge will be Wigan's Championship opener on 3 August, though a Wembley date against Manchester United in the Community Shield follows on 11 August.