The Israeli manager is set to take charge at the Boleyn Ground subject to the granting of a work permit.
Grant, 55, led struggling Portsmouth to the FA Cup final last season despite the south coast club being in severe financial difficulty.
“I am proud and honoured to be the manager of West Ham,” Grant told West Ham’s official website following his appointment. “It will be an exciting challenge and I am ready to do my best.
“This is a fantastic club with great fans and a history that is respected around the world. I am already looking forward to getting to work with my players in July and preparing for the new season.”
Hammers co-owner David Sullivan said: “I am delighted to welcome Avram to West Ham and am confident he will prove a success. We have taken our time over this appointment and are certain we have got the right man.
“We are all looking forward to next season with new players coming in and Avram’s arrival is just the latest reason for real optimism.”
David Gold, Sullivan’s fellow owner, said: “I have to say that having met Avram and spent some time with him that we have got our man. He is a perfect fit.
“We needed experience and stability. He is a footballing man and quite frankly his reputation speaks for itself. He has a great sense of humour and I am sure the players will relate to him and the fans will warm to him.”
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