Mancini resigned from his post as manager of Italy just a fortnight ago.
The 58-year-old was in charge of the Azzurris for five years and led them to glory at EURO 2020, beating England in the final.
The former Manchester City boss presided over a record 37-match unbeaten run between October 2018 and October 2021.
However, under Mancini's tenure, Italy failed to qualify for the 2022 FIFA World Cup in Qatar.
He has since been replaced by Luciano Spalletti.
Saudi Arabia were looking for a new boss following Herve Renard's decision to quit in March.
“I am excited to announce that I am joining the Saudi Arabia Football Federation as Head Coach of the National Team,” wrote Mancini on Instagram.
“I am delighted and honored to have been selected for such prestigious role, as a sign of appreciation and recognition for all the work done during these years. I wish to thank the President Yasser Al Misehal.
“I have accepted to embrace such an exciting new project, grounded on a shared vision and purpose to grow the national football sector as well as the young talents and the future generations, who have always been close to my heart.
“I believe this assignment is also a recognition of the importance of the Italian football and I will proudly continue to bring our Italian culture to the world.”
Mancini's contract will run until 2027.
