The Dutchman - a former boss at Spurs - replaces Mark Hughes, who stepped down from his post last week. Jol's deal includes the option to extend to the 2013/14 season.
In a statement, Jol said: "I am very happy to join Fulham Football Club, a wonderful traditional club. It is a club with good, solid foundations and a great fan base. I am looking forward to being part of the Fulham family and thank the Chairman for the trust he’s shown in me."
The club said that Jol would arrive for pre-season training with the squad later this month.
Former Fulham player Alan Mullery lauded Jol's appointment, telling Sky Sports News that he would bring "vast experience" to the role. "I'm very pleased he's joined. A year ago, he was Fulham's first choice before Mark got the job, but Martin decided to stay at Ajax. Fulham are a terrific football club and everybody there will do their best to make Martin stay."