German-born Wagner, 44, left the Bundesliga giants earlier this week after coaching their under-23 side. Town moved quickly with the former striker tipped to join Liverpool’s backroom staff and join up with his good friend Jurgen Klopp at Anfield.
In the process, Wagner, who has been appointed just over 24 hours after Chris Powell was axed, also becomes the club’s first head coach.
Wagner’s work in developing young players at Dortmund and Hoffenheim is one of the main reasons why the Town hierarchy - keen for more Academy players to find their way into the team at first-team level - opted for a change, with chairman Dean Hoyle hoping that the new direction pays off.
Equally, Hoyle admits it will represent a risk given the fact that Wagner is unproven in the English game, but he is confident that the club are onto a winner.
Wagner will take a watching brief in Saturday’s West Yorkshire home derby with Leeds United, with caretaker boss Mark Lillis to chose the team and lead it from the touchline.
He will officially start work on Monday.
Wagner will be joined at Huddersfield by assistant Head Coach Christoph Bühler, whom he worked with at Borussia Dortmund II.
Hoyle said: “It is new departure for us. He will be Head Coach; he is the club’s first from outside the UK and Ireland and he brings a new approach and new ideas.
“In his own words, and as we hope will be seen in practise, his playing style echoes the one that has brought Borussia Dortmund such success over the last five years. Although the players are different, there are few fans who have watched that style in action and not found it enthralling to watch. I believe that will excite our fans.
“His approach is a winning one. He is a head coach that sets his teams up on the front foot to win matches. He is up for the challenge of making Huddersfield Town a success on the pitch in the Sky Bet Championship.
“He also understands and believes in the Club’s plan of producing and developing its own players. That was a major part of his job in charge of Borussia Dortmund (u23s).
“He knows what it takes to prepare young footballers for the rigours of senior football. Perhaps most importantly, he has trust in young players, which it attractive to us.
“When we spoke with David, his knowledge of our squad was impressive and he already has firm ideas of where he wants to develop it going forward. He is very passionate and totally committed. He lives and breathes football and that fits the club.”
“I’m sure the events of the last 48 hours, coupled with the appointment of an overseas head coach new to English football, will have surprised many people.
“There is definitely an element of risk to this, but that can be managed and I firmly believe this is the right direction for the club to go in. I hope this appointment will reinvigorate us, bring excitement and allow us to make a big stride forward.”
Born to a German mother and American father, Wagner enjoyed a playing career as a striker in the Bundesliga – winning the UEFA Cup with Schalke 04 – and also represented the United States internationally on eight occasions.
When he hung up his boots, he studied a degree in Biology and Sports Science at the University of Darmstadt and worked as a teacher before earning his UEFA Pro License.
David started his coaching career with the Under-17s at 1899 Hoffenheim before being named as manager of Dortmund under-23s in July 2011.