The 35-year-old has been promoted to the position having spent the last seven years playing as a striker for the Scottish Premiership outfit.
Foran, who has captained the side in 209 matches, replaces John Hughes, who left Inverness earlier this month due to spending restrictions.
Chairman Kenny Cameron told the club's official website: "We are delighted to have Richie on board as the new manager of Inverness Caledonian Thistle FC and we believe the length of contract demonstrates commitment on both sides.
"The board received and reviewed a high number of applications for the vacant position and Richie quickly became our preferred candidate. This was cemented further during several meetings to discuss the role, his approach and view for the future. Our decision that he is the right man to lead the club was unanimous and we look forward to working closely with him on the next stage of what has been a remarkable journey.
"Richie has been a great asset to the club, both on and off the park, since joining us in 2009. He particularly understands the blend of spirit, values and togetherness that makes the club what it is. The influence and passion he exhibited as a player, combined with his clear determination and knowledge will all serve him well when it comes to building on and enhancing the club's qualities. It was only a matter of time before Richie stepped up into a management role and that time has come."
Foran added: "I want to play exciting, attacking football which entertains the supporters. I've identified areas in our play that I think I can improve, and I've identified what kind of players we need to bring in to improve our team.
"My target is to further strengthen the unity between supporters, directors, management and players – when we signal that we're all on the same wavelength, that makes a huge difference.
"I've been fortunate, as club captain, to have an excellent relationship with the fans and I hope we can all move on with a scenario where everyone is focused on helping the team go forward."
Foran scored 45 goals during his spell as a player at Inverness.