The 46-year-old has signed a four-year contract that will keep him in charge through Euro 2028 and the 2030 World Cup, becoming the first non-Dutch head coach of the national team since Austrian Ernst Happel stepped down in 1978.
The appointment brings to an end a search that began when Ronald Koeman resigned following the Netherlands' last-32 exit to Morocco at this summer's World Cup.
"I consider it a tremendous honour to become head coach of the Dutch national team," Xavi said. "As someone who received his training at Barca's academy, with strong influences from Johan Cruyff and Rinus Michels, among others, I feel a special connection to Dutch football.
"You could say that I am partly a son of Dutch football. Other great coaches, especially Louis van Gaal, under whom I made my debut at Barca, and Frank Rijkaard, also played an important role in shaping me as a player and coach."
Xavi's route to the job was not straightforward. Former Liverpool head coach Arne Slot had held talks with the Royal Dutch Football Association over the vacancy but confirmed he had withdrawn because he wants his next role to be in club football, while Roberto Martínez was also reported to have discussed the position before those talks failed to progress.
The Netherlands ultimately turned to Xavi, whose only previous managerial experience beyond Al-Sadd came at Barcelona, where he won a La Liga title in his first full season in charge following his appointment in November 2021, before departing the club in 2024.
Xavi, who won three international trophies during a playing career built at Barcelona, was part of the Spain side that beat the Netherlands in the 2010 World Cup final, giving an added layer of history to his appointment.
He will take charge of his first match against Jurgen Klopp's Germany in the Nations League on 24 September, a fixture that will offer an immediate first indication of how quickly he can stamp his ideas on a Dutch squad still searching for direction after a disappointing summer in North America.