The 45-year-old has agreed a two-year contract at the Stadium of Light and will take charge of the Black Cats with immediate effect.
Poyet, who was sacked by Brighton and Hove Albion in June, will be joined at the Stadium of Light by his backroom staff Mauricio Taricco and Charlie Oatway.
Speaking about the appointment, Sunderland chairman Ellis Short said: “We analysed a wide range of candidates and believe that Gus’s track record, experience, commitment and passion make him the right man to take us forward.
“We welcome him to Sunderland.”
Poyet first arrived in English football as a player with Chelsea in 1997 where he went on to make 105 appearances, scoring 36 goals for the Blues.
He then moved to London rivals Tottenham Hotspur in 2001, where he spent three years as a player. He was capped 26 times for his country.
The Uruguayan began his coaching career in England in 2006 at Swindon Town, before joining Leeds United as assistant manager.
After a year at Elland Road, Poyet returned to his former club Tottenham Hotspur as first-team coach, before becoming assistant manager to Juande Ramos.
In 2009, he was appointed as Manager at Brighton and Hove Albion.
During his tenure on the south coast, he led the club to promotion to the Championship and reached the play-off semi-finals.
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