Roberto Mancini won Italy's second European Championship title at Euro 2020
The 58-year-old led Italy to victory at Euro 2020, beating England on penalties in the final at Wembley.
The team went on a world record 37-game unbeaten run but failed to qualify for the 2022 World Cup.
He has signed a contract until 2027. His first match in charge will be on 8 September against Costa Rica at St James' Park, Newcastle.
"I believe this is a great opportunity for me, to experience football in a new country, especially with the growing popularity of football in Asia," Mancini said.
"The presence of top players in the Saudi Pro League indicates the potential for growth in the national football scene."
In last year's World Cup under former head coach Herve Renard, Saudi Arabia shocked eventual champions Argentina in a 2-1 win in Qatar but failed to make it out of the group stages.
Mancini led Manchester City to their first Premier League title in 2012 and has also managed Fiorentina, Lazio, Inter Milan, Galatasaray and Zenit St Petersburg.
-- Courtesy of BBC Sport