Oates, 49, has never had a head coaching position. He most recently was an assistant for the New Jersey Devils for two seasons and one season before that with Tampa Bay.
His hiring continues a trend by Washington General Manager George McPhee. Oates' four predecessors -- Bruce Cassidy, Glen Hanlon, Bruce Boudreau and Dale Hunter -- didn't have head coaching experience when they were hired.
Boudreau was fired late last November and replaced with Hunter, like Oates a former Capitals player. Hunter told the team after the season that he didn't wish to return for next season.
"We are very pleased to name Adam Oates as the new head coach of the Washington Capitals," McPhee said. "Adam was a highly intelligent player in the NHL for 19 seasons. He has been an assistant coach in our conference for the past three seasons and is prepared to lead our club as head coach."
Oates ranks sixth in NHL history with 1,079 assists over his 19 seasons as a player. He played for a total of seven NHL teams over a career that ran from 1985-2004.