Joerger joined the Grizzlies as an assistant coach in 2007 after a successful series of coaching positions in lower-level leagues.
His teams won five championships in a seven-year span before he was hired by Memphis.
"We are thrilled to announce we have hired David Joerger as the next head coach of the Memphis Grizzlies," team Managing Partner Jason Levien said in a statement Thursday. "Not only do we think Dave will continue to grow the team's league-best defensive identity but we believe we have one of the league's budding coaching talents to lead our team."
Joerger replaces Lionel Hollins, who wasn't retained even though Memphis won a franchise-record 56 games and advanced to the Western Conference finals for the first time. Hollins had coached the team for the previous five seasons.
Joerger's work with the Grizzlies on defense was credited as a key component of the team's recent success.
Memphis allowed an NBA-low 89.3 points per game this season and three team members -- Tony Allen, Mike Conley and Marc Gasol -- were on all-NBA defensive teams. Conley was voted the NBA Defensive Player of the Year.