The Welshman had been at Loftus Road for the last two days to discuss the possibility of replacing Neil Warnock, who was sacked on Sunday evening.
An agreement between both parties has now been reached and the 48-year-old will take control of the club immediately.
"It's a great feeling to be back in football and to be the manager of QPR," Hughes told the club's official website. "I'm fully aware of the challenge in the short and long term and I am genuinely excited about the ambition of the owners.
"Nobody can doubt the history of this great football club and the passion of its fantastically loyal supporters.
"Now the immediate priority is to consolidate our place in the Barclays Premier League, but beyond that, the future is very bright and fills me with great enthusiasm."
QPR chairman Tony Fernandes added: "Mark has a proven track record in the Premier League, bringing a wealth of experience at both Club and international level.
"He has a great passion to achieve as a Manager and has already been hugely successful in his career.
"His ambitions match those of the Board and we are delighted to have him at the helm."
Hughes will be joined at the club by assistant manager Mark Bowen, first-team coach Eddie Niedzwiecki and goalkeeping coach Kevin Hitchcock.