Rangers owner Tom Hicks said Showalter was the Rangers' first choice and it was apparent that he and general manager John Hart made an immediate push for Showalter rather than wait for other competitors, such as the Chicago Cubs or New York Mets, to make their bids.
"We needed to make a change in our culture," Hicks said. "John talked to a lot of qualified candidates and we got absolutely the best person available."
It was believed that the Tampa Bay Devil Rays and Milwaukee Brewers also expressed interest in Showalter.
Terms of Showalter's contract were not disclosed.
"It's very exiting to be here for lot of reasons," Showalter said. "I was hoping that they wanted me as much as I wanted them."
Showalter took both the New York Yankees and Arizona Diamondbacks to the playoffs but has never won a postseason series. Both clubs won the World Series the year after his departure.
The 46-year-old has a 563-504 record in six seasons as a major league manager. He had been an analyst for ESPN since he was fired by the Diamondbacks after the 2000 season.
Showalter replaces Jerry Narron, who did not survive a second straight last-place finish. Narron was fired two days after the Rangers completed a 72-90 campaign.
Known as a disciplinarian who likes to be involved in all facets of the organization, Showalter inherits a team that scores plenty of runs, with sluggers Alex Rodriguez and Rafael Palmeiro, but has one of the league's worst pitching staffs.
Chan Ho Park signed a five-year, $65 million contract but was plagued by injuries most of the year and won just nine games. The bullpen ranked last in the AL with 38 losses and failed to convert 31 of 63 save attempts.
After making the playoffs three times from 1996-99, the Rangers have finished last in the AL West each of the last three seasons.
Hart admits it will take more than a managerial hiring to reverse the team's fortunes but saw Friday's hiring as a huge step in the right direction.
"You can't put Willie Shoemaker on a Clydesdale and expect him to win a race," Hart said. "I think this is one thing we can control."
Showalter is the third Texas manager in less than two years. Narron was hired in May 2001 when Johnny Oates resigned after an 11-17 start. Texas finished 62-72 under Narron.
In 2002, the Rangers had an Opening Day payroll of $105 million, the third-highest in baseball, but finished 31 games out of first place.
"We don't have all the answers," Showalter said. "We're going to search for them and get them right."
The 1994 AL Manager of the Year with the Yankees, Showalter guided New York to its first playoff berth in 14 years in 1995. He was not retained after that season but caught on the with the expansion Diamondbacks and led them to the National League West title in 1999, just their second year of existence.
Showalter was fired after the Diamondbacks slipped to third place in 2000. It was believed many veterans grew tired of his strict style.
Showalter spent 19 seasons in the Yankees' organization and was named manager in 1991 at the age of 35. He was fired after the Yankees blew a 2-0 lead in the 1995 AL Division Series against Seattle.