The 59-year-old Frenchman takes over from Vahid Halilhodzic who led the nation to the last 16 of the FIFA World Cup in Brazil.
Halilhodzic left his post shortly after his side bowed out to Germany in extra time, with Gourcuff making his first foray into international management.
His most recent job was a second stint at Lorient - where he played for four years between 1982 and 1986 - with his first challenge set to be qualifying for the Africa Cup of Nations in 2015.
"The Federal Bureau [have] decided to appoint Mr Christian Gourcuff as national coach from 1 August 2014," read a statement from the Algerian Football Federation.
"A goal for the coming Africa Cup of Nations in 2015 and 2017 and the 2018 World Cup will be implemented.
"Mr Gourcuff will also participate in the training and development of the National Technical Department."
Gourcuff, a former midfielder, had spent 11 seasons with Lorient prior to taking the Algeria job.
