"I am honored to become the next manager of Rangers".
Rangers director of football Mark Allen added: "From the moment we met with Steven to discuss this opportunity, we felt that his ambitions and desire to succeed equalled our own for the club".
The 54-time league champions last won the title in 2010/11 before their demotion to Scottish Third Division the following season.
Gerrard, regarded as one of the greatest players in Liverpool history, won 11 major trophies for his hometown club and went on to make 114 worldwide appearances for his country.
The club said details of Gerrard's backroom staff "will be announced in due course".
"The supporters were another big reason why I wanted to come here and be a leader for them".
Gerrard, who leaves his role as a youth coach at Anfield to take up the Rangers job this summer, captained the Reds and England.
United Nations chief warns against scrapping Iran nuclear deal
French President Emmanuel Macron on Wednesday reiterated his commitment to the accord but admitted that it needed strengthening. The Islamic republic has always denied it sought a nuclear weapon, insisting its atomic programme was for civilian purposes.
After taking to his new post at Ibrox this summer, next season Gerrard will come up against his former Liverpool boss Brendan Rodgers, who is now in the Celtic hot seat. I couldn't have asked anyone better to help me. In football, if you are working under pressure you are in a good place.
"Bring it on. I don't mind being under intense pressure. There were a lot of things to think about but from that phone call I got a special feeling and I knew Rangers was for me".
One of the biggest challenges Gerrard will face at Ibrox is bridging the gap to Celtic despite their Glasgow rivals' far superior budget.
They'll really be hoping Gerrard can improve the team immediately and get them competing with Celtic on all fronts next term.
Gerrard has already put together a list of potential signings with former Liverpool team-mate Martin Skrtel one of his top targets.
He said: "I feel a connection with this club".
"So now it looks like they actually might make it happen I have to take my hat off to Dave King and his board for being so bold and ambitious".