The job represents a golden opportunity for Villas-Boas. A year ago he took over at London rivals Chelsea on a three-year deal but he struggled at Stamford Bridge and left under a cloud nine months later amid media reports of dressing-room unrest.
"Tottenham Hotspur are a great club with a strong tradition and fantastic support, both at home and throughout the world. I feel privileged to become coach," the 34-year-old told the Spurs website.
"This is one of the most exciting coaching positions in the Premier League. I have had several discussions with the chairman [Daniel Levy] and the board and I share their vision for the future progress of the club.
"This is a squad any coach would love to work with and together I believe we can bring success in the seasons ahead," the Portuguese added after replacing Harry Redknapp who was sacked last month after four years at the helm.
Hopes were initially high for Villas-Boas at Stamford Bridge after he guided Porto to Europa League glory and a Portuguese domestic double the previous season.
However, he was sacked in March after the 2009/10 Premier League champions suffered a string of poor results.
His number two Roberto Di Matteo took over in a caretaker capacity and sparked a remarkable turnaround in fortunes that led to Chelsea winning the Champions League and FA Cup.
Tottenham removed the popular Redknapp after finishing fourth in the league but failing to qualify for Europe's top competition thanks to Chelsea's victory over Bayern Munich in the Champions League final.
It was a frustrating season for Spurs who, at the halfway stage in the league, had mounted a credible title challenge.
OUTSTANDING REPUTATION
Redknapp's dismissal has cleared the way for Villas-Boas to return to the spotlight and while his appointment will be met with scepticism elsewhere in London, his past triumphs cannot be overlooked.
"He has an outstanding reputation for his technical knowledge of the game and for creating well-organised teams capable of playing football in an attractive and attacking style," said Levy.
"Andre shares our long-term ambitions and ethos of developing players and nurturing young talent."
Redknapp was an old-school man-manager type and Levy now seems to want to create an image of Spurs as a modern, high-flying, big-spending football club.
"We are constantly looking to move the club forward," he said on Tuesday.
"It is important we now look to develop potential within the squads at all levels while strengthening the first team in the summer in key positions with players who will become part of the future success of the club."
Villas-Boas brings with him two members of his backroom staff - fitness coach Jose Mario Rocha and Daniel Sousa, head of opposition scouting.
Second chances for rookie coaches are uncommon in top flight football, particularly in what is one of the toughest domestic leagues in the world.
The pressure will be on Villas-Boas from day one but the Spurs fans are likely to be wearing permanent smiles if he can reproduce the same kind of success he enjoyed at Porto.
The Londoners start the new league season at Newcastle United on August 18.
