The former Celtic defender has left his role as a youth coach at Everton to take the job.
He replaces Terry Butcher, who was sacked following Hibs' relegation from the Premiership last season.
"To be given this opportunity with Hibernian is a great privilege and a real honour - it is a massive club with huge potential," said the 42-year-old.
Stubbs has been appointed on a two-year contract and will be hoping to lead the Easter Road side back to the top flight at the first attempt, with Edinburgh rivals Hearts and Rangers also in the second tier next term. A decision has yet to be made on his assistant.
"I'm excited about the future here at Hibernian and what we can all achieve together at the club - this is the start of the journey," he added.
"The Scottish Championship will be a tough division, but I'm confident that if we approach the challenge with enthusiasm, optimism and belief then we can achieve success.
He is a driven, intelligent and strong-minded character, who has a very clear vision about what he wants to achieve in football
"I've been at Everton for almost six years and now I believe I'm ready to take on the role of head coach here at Hibernian."
Hibs chief executive Leeann Dempster revealed her delight at the appointment, insisting the Englishman shares her vision for the club.
"There were strong candidates who applied for the position but after much consideration, Alan emerged as the standout choice," she said.
"It's important that the CEO and head coach are very much on the same page and that they forge a close working and trusting partnership. I spoke with Alan and it became apparent early in the discussions that we had a common goal.
"He is a driven, intelligent and strong-minded character, who has a very clear vision about what he wants to achieve in football - producing positive results, playing attractive football and developing young players.
"All those attributes fitted the criteria we required and we're confident Alan is the right man to unite the club and bring success to Hibernian.
"Alan will be our head coach and that is part of the new structure in place at the football club; a continental-style model designed for continued long-term success."
Alan Stubbs has been named the new head coach of Scottish Championship side Hibernian.