Grant returns to Africa almost six years after resigning from his position as head coach of Ghana's Black Stars.
Grant took Ghana to the finals of the 2015 Africa Cup of Nations, losing to Ivory Coast on penalties before making the semi-finals two years later.
The 67-year-old Israeli has been without a club since leaving India's North East United in 2018.
Grant's immediate task will be to qualify Zambia for the next Africa Cup of Nations in the Ivory Coast in January and February of 2024.
Zambia won the 2012 African Cup but have failed to qualify for the tournament's last three editions.
"Today’s occasion signals a new beginning for our game. Mr. Grant is a well-known figure in world football. He was previously the national team coach for Ghana and Israel," said Zambia's FA chief Andrew Kamanga at Grant's unveiling.
"At club level, he has coached Maccabi Tel Aviv, Chelsea, Portsmouth, and West Ham, among others. "
"I wish to thank all of you who participated in the transparent process of picking the coach."
Grant added: "I'm very happy to be here. This is my first time in Zambia. It is a lovely country. I think Zambia has the potential, we have set the targets of what we want to achieve."
"I was looking for the right challenge, and that’s why I chose Zambia. I came here because of the challenge, and I hope when I leave here I will look around and say we did a good job and made a good foundation for the future."
Grant took Chelsea to the 2008 UEFA Champions League final, losing to Manchester United on penalties.
