Duquette was the Red Sox GM from 1994 to 2002 and served in the same position for the Montreal Expos from 1991 until his move to Boston.
Since 2002 he has been running a sports academy in Massachusetts.
Duquette replaces Andy MacPhail, who opted last month not to return to the job after more than four years in the position.
"I am pleased to welcome Dan Duquette to the Orioles organization," Orioles majority owner Peter Angelos said. "With an emphasis on developing players from within as well as acquiring players through the international and trade markets, Dan built the Red Sox and Expos into formidable franchises during his tenures."
He takes over an Orioles team that has logged 14 consecutive losing seasons.