Bloomfield has been out of work since his dismissal by Luton in October and succeeds Gary Rowett, who was sacked last month after Oxford managed just one win in 10 Championship matches. The U’s sit 23rd in the table, three points from safety.
“This felt like the right place at the right time,” Bloomfield said, citing the club’s “ambition” and the potential of the squad.
He will attend Friday’s FA Cup third-round tie at MK Dons as an observer, with interim boss Craig Short remaining in charge, before formally taking over ahead of the league visit of Bristol City on 17 January.
Bloomfield made his name at Wycombe Wanderers, guiding them into the League One promotion race before leaving for Luton last January. He was unable to halt the Hatters’ decline, however, and was dismissed with the club mid-table.