The one-time Manchester United, Chelsea, Barcelona and Bayern Munich, who had a stellar playing career, 58, has been out of football management since December 2018 when he left Southampton.
City have now convinced Hughes to drop down into the third tier of the EFL in what chief executive officer Ryan Sparks has described as one of the most significant appointments in the club's history. His deal is until the summer of 2024.
Hughes has spoken of excitement at re-entering management at City and hopes to make the team reconnect with their supporters, play entertaining football and become one who they are proud of watching again.
Hughes said: “I am really pleased to be here and am looking forward to the role, and the job in hand. It has been an exciting few days.
“It is maybe a little bit of a surprise that I have come in, but do not be put off by that!
“I am here for a reason: to make Bradford City a team people want to come and watch - and are proud to watch.
“The supporters come in their numbers, and that is the thing I have missed since being out of management. I am looking forward to the matchday, getting that adrenaline flowing and interacting with the crowd.
“Certainly, from now until the end of the year, we just want to finish strongly and see where that takes us.
“We want to move the club and everybody with it forward, and hope we can have the success everyone wants.”
City’s chief executive officer Sparks continued: “We are delighted to have secured Mark’s services, and I am looking forward to working alongside him.
“His record and stature in the game speaks for itself, and he has achieved a great deal. To have him in our dugout is representative of the club’s ambition and desire to be successful.
“Mark expressed an interest in becoming our manager and, following talks between he, myself and Stefan (Rupp), we are today thrilled to be in a position to unveil him.
“This is without doubt one of the most significant appointments in the history of our football club. Mark recognises our true potential - and has the desire to ensure we fulfil it.
“Mark will be provided with the tools he requires in order to achieve our goals - be that in coaching, recruitment, sports science, medicine or any other area.
“He is relishing the challenges ahead and has repeatedly proven himself to thrive at elite levels of the game, in high-pressure situations.
“I hope you can join us on Saturday, when we face Mansfield Town, so Mark can be given a proper Valley Parade welcome as he leads us into the closing months of the season and beyond.”
Hughes is the second former Old Trafford legend to manage the club following Bryan Robson, who was in charge at the Bantams from November 2003 to June 2004.
After managing his country, Hughes entered domestic management with Blackburn in September 2004 and guided them to sixth-placed finish in the top-flight in 2005–06.
He took charge of Manchester City in June 2008 for a year and a half and brought in the likes of Vincent Kompany, Shaun Wright-Phillips, Pablo Zabaleta, Robinho, Emmanuel Adebayor, Kolo Touré and Carlos Tevez during his time at the club - with Abu Dhabi United investment group taking over a few months after his arrival.
Hughes was sacked in December 2009 and had a spell with Fulham in 2010-11 before a ten-month stint at West London neighbours QPR.
The Welshman succeeded Tony Pulis at Stoke City in May 2013, guiding the Potters to three consecutive ninth-place Premier League finishes in 2013–14, 2014–15 and 2015–16.
Stoke finished in mid-table in 2016-17 and Hughes left the Potteries in January 2018 before moving onto the south coast at Southampton, guiding the club to top-flight safety at the end of 2017-18.
In his playing days, Hughes won the Premier League twice with Manchester United and is also a three-time FA Cup winner. He also won the European Cup Winners Cup at League Cup with United, winning the same competition in his time at Chelsea and Blackburn. He was also promoted to the top-flight with Rovers in 2000-01.
In his time at Stamford Bridge, Hughes also won the FA Cup and UEFA Cup Winners' Cup. He was capped 72 times by Wales.
Hughes will observe training at the club’s Woodhouse Grove base this morning, before taking his first session tomorrow (Friday) and being in the dugout on Saturday.
He will be unveiled to the media on Thursday afternoon.