Koeman vowed to make the team competitive again, even though he does not have a wealth of world-class talent at his disposal.
Koeman takes over a side who failed to qualify for the 2018 World Cup in Russian Federation, the second successive tournament they have missed out on. "That's why I've taken the job".
"Happy to be here and serve the country on our road to Euro 2020!"
Koeman said he was "really positive about the future of the national team" but suggested he would push greater discipline and training over the coming months.
Having finished third in the 2014 World Cup, the Netherlands subsequently failed to qualify for the following two tournaments - namely Euro 2016 and the upcoming 2018 World Cup in Russian Federation.
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The Netherlands were runners-up at the 2010 World Cup and finished third in 2014 in Brazil but failed to qualify for Euro 2016 and this summer's World Cup.
Advocaat then arrived for a third spell in charge of the national side, but at 70 years of age and having failed to rescue World Cup qualification, left his role at the end of 2017.
An attack-minded central defender, Koeman picked up 78 Dutch caps as a player between 1982-94, scoring 14 goals. "Tactically, we can do more".
"I'm a coach who likes to change systems", he said. The best way is so players can handle different systems.
A statement from the Dutch FA (the KNVB) said: "The KNVB has reached agreement with Ronald Koeman about the appointment as national coach of the Dutch national team".
He succeeds Dick Advocaat, who stepped down after the team's failure to reach this summer's finals in Russian Federation.