Wolves sacked Bruno Lage back in October and had intended to allow interim manager Steve Davis remain in charge until 2023 but results have not improved and they have made a decision to bring in Lopetegui much earlier.
Lopetegui was sacked by Sevilla in October after three years in charge during which he won the Europa League in his first season in charge.
Sevilla also qualified for the Champions League in all his three full campaigns at the Ramon Sanchez Pizjuan.
Lopetegui will start his new job when the Premier League goes on a break for the upcoming FIFA World Cup to take place.
Wolves, who host Brighton on Saturday, find themselves in the relegation zone.
Wolves chairman Jeff Shi gushed about the appointment of Lopetegui at Molineux, telling the clubs website: “Julen is a top coach, with excellent experience at an elite level of the game, and we are very pleased to have agreed a deal to bring him to Wolves. Since the very beginning, Julen has been our number one choice to manage Wolves, and we look forward to welcoming him and his team when they join us in the coming weeks.”
