O'Neil arrives at Ipswich with the club preparing to mount a push for survival in the Premier League, having been promoted from the Championship last season.
His appointment is the result of the shock departure of fan-favourite Kieran McKenna, who had guided the Tractor Boys to three promotions during his tenure.
"Ipswich Town Football Club is delighted to confirm the appointment of Gary O’Neil as Manager," the club said in a statement.
"The 43-year-old, who is the 20th manager in the Blues’ 90-year professional history, arrives at Portman Road from French side Strasbourg, signing a three-year deal to the summer of 2029.
"O’Neil guided Strasbourg to the semi-finals of the Europa Conference League last season – the first time the club had ever reached the last four of a European competition – and oversaw an eighth-place finish in Ligue 1."
O'Neil - who used to play for Ipswich's arch rivals Norwich - faces the difficult task of keeping the club in the top flight, but his CV in similar scenarios is promising.
The 43-year-old kept both Bournemouth and Wolves away from relegation during his previous spells in England and arrives having recently replaced Liam Rosenior as Strasbourg manager at the start of the year.
"It is an honour to be appointed Manager of this great football club,” O’Neil said.
"I have followed the progress the club has made over the last few years closely and to now have the opportunity to lead Ipswich Town in the Premier League is something I am hugely excited by.
“There is a strong vision and ambition at this club and I am fully aware of the responsibility that brings, given how much it means to its supporters and to the community of Ipswich and Suffolk.
“We all know the challenge ahead as we prepare for the season together and I’m excited to meet everyone and get to work.”
Ipswich's Premier League campaign gets underway against Sunderland on Saturday, August 22nd.