The 40-year-old arrives at The Valley from Belgian Pro League outfit Waasland-Beveren, having guided them to safety with a 14th-placed finish at the end of the 2013-14 campaign.
Peeters, who played 13 times for Belgium and scored four times, including a hat-trick against San Marino, takes over from Jose Riga.
Riga was appointed as a replacement for Chris Powell in March this year, and managed to secure the club's Championship status, but left at the end of the season when his short-term deal expired.
Before moving to Waasland-Beveren, Peeters had spells in charge of Cercle Brugge and Gent.
Peeters will work alongside current first-team coach Damien Matthew, but former assistant manager Alex Dyer has left the club.
‘So many times when we played Manchester United, arguments would start before the first whistle had even blown – the players would try to kill each other with their eyes’ Former Arsenal star remembers famous Premier League rivalry
Bizarre Jose Mourinho statement aims to pre-empt punishment after Fenerbahce boss clashes with Galatasaray counterpart
