Van Gaal replaces Frank De Boer, who left the role of Netherlands boss in June following a disappointing Euro 2020 exit to Czech Republic in the round of 16, and has agreed a deal up to and including the 2022 World Cup.
"Dutch football has always been close to my heart and national coaching is in my view a key position for the further advancement of our football," Van Gaal said. "Moreover, I consider it an honour to coach the Dutch national team.
"There is little time for the next qualifying matches, which are immediately crucial for participation in the World Cup. The focus is therefore immediately 100% on the players and the approach. After all, I was appointed for that.
"It is good to be back in Zeist. By now I have already spoken to a number of players and the technical staff has been put together with the KNVB. I am very much looking forward to getting the job done together."
The move marks Van Gaal's return to management after he announced his retirement in 2019. The 69-year-old's most recent coaching job was at Manchester United, where he was sacked in 2016 after winning the FA Cup.
Van Gaal was first appointed Netherlands boss in 2000, but the move was short-lived after his side failed to qualify for the 2002 World Cup.
He was granted a second chance at the job in 2012, enjoying a two-year stint in charge. That time the Netherlands successfully qualified for the 2014 World Cup and reached the semifinals before losing to Argentina on penalties.
Danny Blind, Henk Fraser and Frans Hoek will assist Van Gaal in the role.