Shero replaces Hall of Fame executive Craig Patrick, whose contract was not renewed in April after more than 16 years on the job with the National Hockey League club.
Patrick guided the Penguins to Stanley Cup victories in 1991 and 1992, but the team is coming off four consecutive last-place finishes in their division. They have won no more than 28 games in any season since reaching the Eastern Conference finals in 2001.
The 43-year-old Shero is the son of former Stanley Cup winning Coach Fred Shero of the Philadelphia Flyers. He has served the past eight years as assistant general manager at Nashville after holding the same position with Ottawa for six years.