It is the first major decision made by new Italian FA (FIGC) president Carlo Tavecchio since he assumed the post earlier this week.
The Italian FA confirmed the news on Twitter.
According to our Milan office, sportswear giants Puma have stepped in to help finance the deal to make Conte the coach.
The FIGC will pay Conte a salary of €1.7m but Puma will add an estimated €2.5m-a-year which will make Conte the third best paid national team manager in the world after England's Roy Hodgson (€4.5m) and Russia's Fabio Capello (€9.0m).
Prandelli resigned soon after the Uruguay game and has since taken over at Turkish giants Galatasaray.
- Sports & Recreation
- Cesare Prandelli