The hiring comes less than a month after he was fired from a similar post by the Colorado Avalanche. He now will take control of transforming the NHL's worst team.
Hartley led Colorado to a Stanley Cup title in 2001, but was fired on Dec. 18, as the second coach in team history.
"Each coaching situation has its own set of challenges and opportunities, and I'm ecstatic to have the opportunity to get back into coaching again this season and be a part of an exciting, young organization like the Thrashers," said Hartley, who will make his debut Wednesday against Montreal.
General Manager Don Waddell had served as interim coach for nine games after firing Curt Fraser on Dec. 26, and was delighted to land Hartley.
"Bob is a proven winner in the NHL, and has an impressive record of success," Waddell said. "Hiring him to coach this team is another major example of our efforts to continue to build and improve this hockey club. His leadership and experience behind the bench will be a huge plus for all of our players now and for many years to come."
Terry Murray, former coach of the Washington Capitals, Philadelphia Flyers, and Florida Panthers, also interviewed for the job.
Hartley's hiring was first reported Saturday by the RDS Cable Network of Canada, which said the Thrashers were waiting for Hartley to resolve financial issues with the Avalanche.
In Colorado, Hartley coached a galaxy of stars that included Joe Sakic, Peter Forsberg, Patrick Roy, and Rob Blake. With the Thrashers, he will rely on Dany Heatley, the 2002 Calder Trophy winner, and Ilya Kovalchuk, the runnerup for last year's rookie award.
"This team has some great talent, and I look forward to taking them to the next level," Hartley said.
The Thrashers, in their fourth season, are last in the NHL with a 12-25-2-4 record and 30 points. They were 3-5-1-0 under Waddell, who ended his term with a 7-4 victory over the first-place Philadelphia Flyers on Monday night.
Hartley, 42, led the Avalanche to division titles and the conference finals in each of his four full seasons with Colorado, and is the franchise's second-winningest coach with a record of 193-109-48-9.
High expectations cost Hartley his job with Colorado. He was fired on Dec. 18 after the team started 10-8-9-4 in 2002-03. The move did little to spur the Avalanche, who are just 7-5
Hartley becomes the second coach to work for two teams this season, joining Darryl Sutter, who was hired by Calgary on Dec. 28, four weeks after he was fired by San Jose.
Until the 2002-03 campaign, the last coach to work for two teams in the same season was Ted Sator, who guided the New York Rangers and Buffalo Sabres in 1986-87.
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