Salihamidzic has signed a three-year contract, taking over the post after Matthias Sammer quit last July due to ill health.
“He will be the responsible man for the next three years,” said chairman Karl-Heinz Rummenigge.
President Uli Hoeness added that “there will be no contract negotiations without Hasan Salihamidzic at the table”.
Bayern described Salihamidzic as someone they know best, as the Bosnian played more than 300 times for the club from 1998 to 2007 and helped them win the Champions League in 2001.
He was named an ambassador of the club this year, and had accompanied the Bundesliga giants on a tour to Asia.
Salihamidzic was however not Bayern’s first pick for the role.
Hoeness had initially hoped for Germany’s World Cup-winning captain Philip Lahm to take the job, but talks failed.
Lahm in February caught team-mates and club bosses by surprise when he not only announced he would retire in June but also said that he would spurn an offer to fill the vacant sporting director role at Bayern.
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