Eberflus, 51, also was considered a candidate for the Jacksonville Jaguars' head-coaching vacancy. He will join new general manager Ryan Poles in taking over a Bears team that went 6-11 in 2021 under Matt Nagy and has missed the playoffs in nine of the past 11 seasons.
"I couldn't be more excited to have Matt become the next head coach of the Chicago Bears," said Poles, whom the Bears hired Tuesday. "His experience, passion, character and attention to detail made him the right man for both the job and the culture we intend to establish here at Halas Hall. Throughout the search, Matt impressed me when detailing his vision and plan for our team. We look forward to getting to work and assembling a top-notch staff and roster that will help us consistently compete for championships."
Eberflus has spent the past four seasons as the Colts' defensive coordinator under coach Frank Reich. His defenses finished in the top 10 in scoring three times, including being tied for ninth in 2021 at 21.5 points per game.
Eberflus inherits a Bears team that ranked sixth in the NFL in total defense in 2021 but struggled offensively and endured instability at quarterback, where Andy Dalton alternated as the starter with rookie Justin Fields.
The first big question for Eberflus in Chicago will be selecting an offensive coordinator, because a big part of the job for the new coach and GM will be solidifying the quarterback position that has haunted the founding NFL franchise for decades.
The Bears do not have a first-round draft pick in 2022 because they traded that selection to the New York Giants to select Fields, who showed flashes of potential as a passer and as a runner but finished with just seven touchdown passes and 10 interceptions. Chicago went 2-8 in the 10 games Fields started this past season.
The Bears made two postseason appearances in their four years under Nagy but last won a playoff game in 2010. They are 1-3 in the postseason since appearing in Super Bowl XLI after the 2006 season, a game the Colts won.
"I would like to thank Ryan and the McCaskey family for this once-in-a-lifetime opportunity to lead the Chicago Bears, one of the most storied franchises in all of sports in one of the greatest cities in the world," Eberflus said. "I am truly humbled and honored to be named your head coach and together we will do everything in our power to bring a Super Bowl championship back to Chicago."
Eberflus, a former linebacker at the University of Toledo who began his coaching career at his alma mater and hometown school, also interviewed for head-coaching jobs last year after his third season with Indianapolis, where he developed a reputation for demanding relentless effort out of his players.
Eberflus' high standards included counting "loafs" -- a term former Bears coach Lovie Smith also used in his Tampa 2 defense. Eberflus refined his style and terminology during a seven-year stint in Dallas, where he worked with Rod Marinelli, who, like Smith, came from the coaching tree of Hall of Famer Tony Dungy.
Now Eberflus is the second coordinator to leave Indianapolis in two seasons.
Last year, the Philadelphia Eagles filled their head-coaching vacancy with Colts offensive coordinator Nick Sirianni, who took a handful of Colts assistants with him.
Eberflus is expected to bring Colts linebackers coach Dave Borgonzi with him to Chicago, a source told ESPN's Jeremy Fowler.
When Eberflus began his coaching career at Toledo in 1992, he spent nine years with the Rockets as a student assistant, grad assistant, outside linebackers and defensive backs coach. He spent the next eight seasons as Missouri's defensive coordinator (2001-08) before making the jump to the NFL, where he coached linebackers in Cleveland (2009-10) and Dallas (2011-17) before joining the Colts ahead of the 2018 season.
In Eberflus' first season in Indianapolis, the Colts improved from 30th to 10th in scoring defense, from 30th to 11th in total defense and from 26th to eighth in rush defense.
The Associated Press contributed to this report.