The 43-year-old Scot has signed a three-year contract and will begin work immediately with the primary aim of securing promotion from League One.
Beginning his career with his hometown club Falkirk, Weir went on to make over 600 appearances from 1992 to 2012, also turning out for Hearts, Everton and Rangers.
Scotland’s sixth most capped player, Weir is also the oldest ever Scottish football international, playing against Lithuania in September 2010, ages 40 years and 116 days.
In January 2012, Weir announced that he would be leaving Rangers in order to continue his career in England. This coincided with spending time training with Danny Wilson’s Blades squad. The signing never happened, with Weir returning to Everton in a coaching capacity.
Working with the Toffees Academy and reserve teams, Weir impressed and was interviewed by Bill Kenwright before Roberto Martinez was eventually installed as David Moyes’ replacement. The Scot was also rumoured to be following Moyes to Manchester United before agreeing terms with the Blades.
On his new role, Weir said: “My first thoughts about the job are of excitement, I understand how privileged I am to be named manager of a fantastic football club like Sheffield United.
“I realise what a great opportunity is in front of me now and my message to the supporters is that I will work hard and give everything to be successful at Bramall Lane.
“I honestly can’t wait to get started and get a real feel for the club, then obviously I am eager to get organised for when the players return for pre-season training later this month.”
Julian Winter, United’s Chief Executive, commented: “We are thrilled to appoint David and the three-year contract emphasises the fact that he will assist in a change in club culture. I have stated before that the club needs to act differently and David is young, has a great pedigree and will bring a new vision and leadership to the club.
“The process of appointing a new manager has taken slightly longer than we envisaged but by taking our time we believe we have the attracted the right man to take Sheffield United forward.”
David Green, United’s Football Club Chairman, added: “It is sincerely hoped that the appointment of David will re-invigorate the club, including the supporters, and he can be assured that he has the full backing of the Board.
“We have had the opportunity to rejuvenate Bramall Lane and believe David was the best of the candidates to take us forward in a positive manner.”
Chris Morgan, who acted as caretaker manager following the departure of Danny Wilson in April, will revert to his original role as coach.