"From the moment we spoke to Slaven, we were struck by his enthusiasm and excitement about this challenge," Baggies technical director Luke Dowling told the club website.
"He is determined to get back to the Premier League and believes passionately that he can do that with Albion.
"We believe he is a great 'fit' for us - his presence, experience and management qualities are just what we need."
"We want to improve on the pitch and Albion have convinced me they want to return to the Premier League," Bilic said.
"Albion have a short-term project and a long project and they do not clash.
"They made it clear they wanted me to be the one to lead them in this and I didn't think twice once they had spoken to me."