The 42-year-old, who came through the Barcelona youth ranks with his predecessor, has been a coach at the Nou Camp since 2007.
Guardiola named him as assistant coach of the B team, for which they achieved promotion into the third division in their first season in charge.
Vilanova was then employed in a similar role when Guardiola was handed the first-team reins in 2008, going on to win 13 major honours together.
Club president Sandro Rosell announced the decision following Guardiola's statement at this afternoon's press conference.
"Now we can confirm that Tito Vilanova will be our new coach. This was a decision taken by [sporting director] Andoni Zubizarreta and it has been ratified today by our executive committee.
"Tito and Andoni will now work on next season's planning and I am sure they will do a good job."
Zubizarreta revealed that the club's chiefs took the decision to promote Vilanova in order to keep the same back-room mentality.
"We've always said that if the team needs players, we look at home first," said Zubizarreta. "Who do we have here at home? Tito."
Guardiola also gave his backing to his former assistant, saying: "I think the club has taken the best decision possible.
"He is more than capable. The players know him. He will make few changes. He will give the club and these players something that I thought I could no longer give."
Guardiola will remain in charge of Barcelona for the final four games of the season.