Columbus endured a disappointing season in the MLS, finishing outside of the Eastern Conference play-offs for a second consecutive year.
However, they will now hope for a turnaround in their fortunes under Berhalter, who takes over from interim head coach and technical director Brian Bliss.
And chairman Anthony Precourt is confident that Berhalter, whose previous experience of management came with Swedish side Hammarby, has the ability to achieve success in Ohio.
"Gregg's strong vision, passion, work ethic, intelligence, data-driven decision making, broad soccer network and playing credentials separated him throughout this search," Precourt told the club's official website.
"His unique skill-set gives us great confidence in boldly changing the structure of our soccer operations, with Gregg leading as our first-ever sporting director.
"I believe this structure will allow us to achieve a consistent winning culture and best practices that will lead to repeatable success, year-in and year-out.
"I expect great success for the Columbus Crew under Gregg's leadership in the years to come."
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