President Giovanni Malago made the announcement after a top level FIGC meeting in Rome on Tuesday.
Mancini, 61, coached the Azzurri from 2018 and led them to the Euro 2020 title (played in 2021 due to COVID-19). However, he subsequently failed to take the team to the 2022 World Cup finals and resigned in August 2023, becoming Saudi Arabia's coach two weeks later.
He went on to win the league in Qatar with Al-Sadd, adding to previous success in which he won three Serie A titles at the helm of Inter Milan and the Premier League with Manchester City.
The FIGC also appointed former well-travelled coach Claudio Ranieri as technical director.
A new coach was needed as Gennaro Gattuso resigned after Italy failed for the third time in a row to qualify for the World Cup.
The appointment proved difficult as Carlo Ancelotti and Pep Guadiola declined the job and Andrea Pirlo was dropped as candidate over links to a Russian betting company.
Newly hired FIGC technical director Paolo Maldini and adviser Leonardo resigned from their roles on Monday after Pirlo's appointment was blocked.
Former FIGC president Gabriele Gravina had earlier quit, as did team coordinator Gianluigi Buffon.
Ranieri, 74, who famously led Leicester City to a shock English Premier League title in 2016, will oversee technical operations and elite football development across Italy's national team structures.
"Time was running out … I believed the person who should become the new coach of Italy is Roberto Mancini, for a whole list of reasons," Malago said. "There will be a press conference tomorrow with both Claudio Ranieri and Roberto Mancini."
Mancini's first task is the Nations League group stage in which Italy play France, Belgium and Turkey, beginning in September.
with agencies.
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