The Italian, 59, was named the new Inter boss on a deal until June 2013 just a day after they dismissed Gian Piero Gasperini.
Gasperini was only appointed in June but failed to win a game in a short but disastrous spell and leaves with the club 15th in the Serie A table. His final match in charge was Tuesday's shocking 3-1 defeat at newly-promoted Novara.
Ranieri, who has developed a reputation as a football fire-fighter, and will lead his players into battle for the first time at Bologna on Saturday.
A club statement confirmed the widely-expected news this morning. It read: "Claudio Ranieri is officially the new coach of Inter.
"Ranieri has signed a contract with Inter until June 30, 2013.
"All of Inter has the pleasure of welcoming Claudio Ranieri and his staff.
"Ranieri will guide today's training session and will be unveiled tomorrow to the press."
Another battle-hardened Serie A veteran, former Roma boss Carlo Mazzone, is confident Ranieri is the right man for the job.
"I am saddened for Gasperini but football is like that," said Mazzone.
"Ranieri is ready, he knows the league well, has experience and has charisma.
"I always say that a coach that has experience has an advantage.
"Ranieri, with respect to Gasperini, has coached important teams and that gives him a better understanding of the game."
Ranieri, however, has never won the Italian Scudetto and that is a must at a club that has dominated Serie A football in recent years.
Inter, who finished runners-up in the league last season to AC Milan, had established themselves as the leading side in Italy with a run of five league titles under Roberto Mancini and then Jose Mourinho.
Mourinho´s two-year stint was all the more impressive as in his second season in charge (2009-10), Inter won a Serie A, Coppa Italia and Champions League treble.
After Mourinho decided to leave for Real Madrid, Inter appointed Rafael Benitez but then sacked him in December and brought in Leonardo.
After a runners-up finish, Leonardo decided to accept an offer to become the sporting director at Paris St Germain.
Chile coach Marcelo Bielsa and Fiorentina boss Sinisa Mihajlovic both turned down the chance to take over at the San Siro before the club surprisingly appointed Gasperini, but his time in charge was characterised by baffling formations and poor results.
President Massimo Moratti will be hoping the arrival of Ranieri, Inter's fifth coach in the last 15 months, will bring some much needed stability.
He has been out of work since leaving Roma earlier this year but has great experience of taking over clubs in similar positions.
Ranieri joined Parma midway through the 2006-07 campaign and managed to steer the relegation-threatened club to safety.
The following year he led Juventus to a third-placed finish just one season after the Turin giants had been competing in Serie B.
After being sacked by Juve the following May, Ranieri was put in charge of struggling Roma six months later and guided his home-town club to a runners-up finish in Serie A behind Inter.
Ranieri, speaking before the announcement was made official, said: "It's been a bad start to the season for Inter and I will talk to the team to understand why that was.
"I will have to bring enthusiasm and change gear in order to wake up the team.
"I cannot promise that we will win this or that but I believe this team has a lot to give and we must prove it."