The 53-year-old former Barcelona player will replace Luis Enrique, who announced earlier this year that he would be stepping down at the end of the season.
Barcelona president Josep Maria Bartomeu said: “Valverde has the ability, the judgement, the knowledge and the experience.
“He promotes the youth players and he has a Barca way.
“He was not the only name on the table. From the moment Luis Enrique said he was not going to continue, (technical secretary) Robert Fernandez began a search.
“He spoke to a lot of people and studied the market. Many people took part in this decision and we did look at different names but our conclusion was one name and one coach. We know him, we know what he can do.
“Robert explained he was looking for a coach who had the Barcelona profile and knows the style. Ernesto is a very hard worker. He has knowledge, experience and has a philosophy similar to ours. He works a lot, he likes using technology.”
Valverde’s official introduction to fans and the media will be held on Thursday.