The ex-Everton and Manchester United striker's appointment is the first managerial change made by Blues' new American owners Shelby Companies Limited since they took over in July.
Rooney will be supported by his former England team-mate and current England Under-21 assistant Ashley Cole and his old United colleague John O'Shea, the assistant coach of the Republic of Ireland men's national team.
Carl Robinson and Pete Shuttleworth will also be part of Rooney's backroom staff after both assisted him at DC United.
It will be Rooney's third job in management following spells at the MLS club and Derby County.
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