Dunlap, 55, comes to the Bobcats from St. John's University, where he was the top assistant under head Coach Steve Lavin.
He replaces Paul Silas, who was fired after the squad completed a disastrous 7-59 season. Their .106 winning percentage was the lowest ever recorded in league history.
"The Johnnies basketball family is ecstatic for coach Dunlap's opportunity," Lavin said.
His "unprecedented jump" from college assistant to NBA head coach "is testament to both Mike's abilities as a teacher and our basketball program's marked improvement over the past 27 months," Lavin added.
Dunlap previously served two years in the NBA as an assistant under Denver Nuggets head Coach George Karl and was an assistant at Oregon and Arizona.