Mancini, 58, led Italy to the Euro 2020 title but failed to qualify for last year’s World Cup.
“I am immensely honoured to be offered the position as Saudi Arabia national team manager,” Mancini, who has signed a four-year contract, said on Sunday.
“I believe this is a great opportunity for me, to experience football in a new country, especially with the growing popularity of football in Asia.”
He added: “The presence of top players in the Saudi Pro League indicates the potential for growth in the national football scene.”
Saudi Arabia, the world’s biggest crude oil exporter, has made waves this summer by buying a host of players from European clubs for teams in the Saudi Pro League.
Brazil star Neymar was the latest in a growing list of big names to be attracted by the huge sums offered by the Saudis after Cristiano Ronaldo kicked off the trend by moving to Al Nassr in January.