The Tractor Boys were given permission to speak to the 43-year-old by Shrewsbury Town earlier this week after agreeing a compensation package, and personal terms have now been decided in a deal which will keep him at Portman Road until 2021.
Hurst, who replaces Mick McCarthy as Ipswich boss, took Shrewsbury from the bottom of League One to the playoff final in less than two years, being named the division's Manager of the Year for the campaign just finished.
"Following what has been an exhaustive search I am delighted to announce Paul Hurst as our new manager. His skill, experience and reputation enhanced by his recent success at Shrewsbury had placed him, from the start of the process, on my shortlist of candidates, resulting in the need to wait until after the League One playoff final to reach a final decision," Ipswich owner Marcus Evans told the club's official website.
"I would like to put on record my thanks to the many football people who have helped me reach an informed decision on the appointment and to the other excellent candidates all of whom, also, had great ideas to take the club forwards. However, having spoken with Paul it reaffirmed why he had always been my top target since day one in the recruitment process. We are looking to build on the club's history of playing an attractive, winning style of football; developing youth through our academy and getting the most out of every player we have here.
"Paul ticks all the boxes when it comes to these key attributes and his credentials are backed up by a detailed knowledge of the English leagues whilst demonstrating an ability to adapt, on the pitch, when needed to find a way to get results over the course of a long and arduous season. Paul's efforts over the 2017-18 season were rewarded by him being named the League One manager of the year.
"This award, voted for by his fellow managers, reflects the high esteem in which he is held within football circles where his achievements at Shrewsbury, with limited resources, were recognised ahead of his peers at the automatically promoted sides who had only just left the Championship and not so long ago were in the Premier League.
"I am hugely excited that Ipswich is providing an opportunity for a young, up and coming manager to prove himself in one of the world's toughest leagues and in time hopefully the highest league level in world football. I am sure all of our supporters will get behind Paul and like me can't wait for the new season to get started."
Hurst added: "I'd like to thank Shrewsbury for giving me the chance to manage at League One level. It was an unbelievable season and just disappointing that we couldn't cap it off in the way we would have liked to.
"I had an excellent relationship with everyone at the club and I'd like to wish Shrewsbury the best of fortunes but when this opportunity came up, it was just too good to turn down. Ipswich are a big football club when you think of the stature and history it has in the game. When I was just starting to watch football I can remember the likes of Mills, Burley, Wark and Cooper and what a great team they had.
"The club has a great reputation and always looks to be well run and I'm delighted to now be part of Ipswich Town, with an opportunity to make our own history. I'm ambitious and I can't wait to get going and test myself at a higher level. The building blocks are here and it's my job to move the club forward. I'll be doing my absolute best to do that."
Hurst will be joined at Portman Road by his former Shrewsbury assistant Chris Doig.