 Gatland will lead Wales through to the 2011 World Cup in New Zealand |
"I feel tremendous pride in coaching Wales and gratitude at the chance to work at the highest level," he said.
"Wales is the sleeping giant of world rugby, I want to achieve potential."
The ex-Wasps and Ireland coach, 44, will start his new role in December, having been prised from a job with Waikato in his native New Zealand.
Wales have been without a coach since sacking Gareth Jenkins the day after they were knocked out of the World Cup by Fiji at the end of September, although caretaker Nigel Davies will take charge of the team for the 24 November Test with South Africa in Cardiff.
Gatland - a hooker who represented New Zealand 17 times between 1988 and 1991 but was denied a cap by the presence of Sean Fitzpatrick in the team - was on a shortlist of three foreign coaches approached by the Welsh Rugby Union.
He met WRU officials in New Zealand last month at the start of the Union's global search for a new coach and arrived in Cardiff at the weekend, but he will return down under to complete his commitments at Waikato before taking up the job.
"We are delighted to have secured our first-choice candidate," said WRU group chief executive Roger Lewis, who has brokered a deal thought to be worth in excess of £1m.
"We were determined to secure at least a four-year term which means Warren can focus on creating a sustainable future for Welsh international rugby."
Meanwhile, the WRU is still negotiating with another New Zealander, Andrew Hore, to become the new elite performance director, who would work above Gatland.
"I would have no problems at all working with Andrew," Hamilton-born Gatland said.
"But that appointment has nothing to do with me. The Welsh Rugby Union are working through that process at the moment.
"I want to base success on strong foundations, and I will be working closely with the regional coaches to achieve my aims.
"My priorities are clearly defined with the short-term goal to ensure we put the right things in place to face England in the Six Nations and in the long term I will be working to develop a team for the next World Cup.
"I also hope the man who succeeds me eventually will be from Wales because the talent is here and it is developing quickly."
There has also been media speculation linking the Wasps defence coach - Great Britain rugby league legend Shaun Edwards - with a move to Wales when Gatland takes charge.
He and the New Zealander were part of Wasps' 2004 Heineken Cup winning coaching set-up, while former Wasps scrum-half Rob Howley could also be approached by Gatland.
Edwards has expressed an interest in stepping up to international level, albeit on a part-time basis.
But Gatland said: "That is pure speculation and it would be unfair at the moment to comment much further on those things, especially as Shaun is under contract at Wasps."
Gatland enjoyed a highly successful spell as coach after joining the English side in 2002, leading them to three consecutive Guinness Premiership titles (2003, 2004 and 2005) and the Heineken Cup in 2004.
He cut his coaching teeth at Connacht before succeeding Brian Ashton in the Ireland job, enjoying three successful years only to be ousted by Eddie O'Sullivan in 2001.
He is currently assistant at Super 14 team the Chiefs and is also in charge of the Waikato NPC side, and Waikato Rugby Union chief executive Graham Bowen said he departs with their blessing.
"The Wales coaching job was an opportunity too good to turn down for Warren, who had aspirations to continue on as an international coach," said Bowen.
"We have a good relationship with Warren and maybe sometime in the future he will again be able to add value to Waikato Rugby.
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