Leicester City dismissed Craig Shakespeare last week following a poor start to the season which saw them pick up just one win in their first eight Premier League matches.
Puel takes over a contract until June 2020, with Michael Appleton remaining as assistant manager.
“It’s a great privilege to become the new manager of Leicester City – a club whose values and ambitions are closely aligned to my own,” Puel told Leicester’s official website.
“The opportunity to help the club build on its remarkable recent achievements is a truly exciting one and I’m looking forward to working with the owners, players, staff and supporters to deliver further lasting success.”
Despite being axed at Southampton in June, Puel presided over a solid campaign in his only season in charge at St Mary’s, with Southampton finishing eighth and reaching the EFL Cup final.
Reports suggested the Frenchman’s removal came down to a combination of fan displeasure and a poor relationship with several players.
But Leicester have decided the former Nice coach is the man to take them forward, with the Foxes sitting 14th ahead of Sunday’s visit of Everton.