The 42-year-old former Celtic defender has been described by chief executive Leeann Dempster as 'the stand-out choice' in the club's search for a successor to Terry Butcher, who was sacked earlier this month following relegation from the SPFL Premiership after just seven months in the job.
Stubbs' assistant at Everton, David Unsworth - they worked with the under-21 side - has decided to remain in Liverpool, however.
Stubbs was interviewed for their manager's post at Goodison Park following the departure of David Moyes last summer, an indication of the esteem he is held in at Goodison Park, and he has been keen for some time to step up from reserve football.
Hibs will have noted how he helped the prodigious development of the likes of Ross Barkley and John Stones at Everton, both of whom have been tipped for successful futures in the game and with England.
Stubbs, who was introduced to the Hibs first-team squad at their East Mains training base yesterday, feels the time is right to step up. "To be given this opportunity with Hibernian is a great privilege and a real honour - it is a massive club with huge potential," he said.
"I'm excited about the future here at Hibernian and what we can all achieve together at the club. This is the start of the journey.
"The Championship will be a tough division, but I'm confident that if we approach the challenge with enthusiasm, optimism and belief then we can achieve success."
While Stubbs is Hibs' eighth 'manager' in the last decade, it is not a title he will take on after the Easter Road club revealed he would instead assume the role of head coach.
The move mirrors the one across the city at rivals Hearts, who appointed Robbie Neilson under Craig Levein as director of football. Rather than someone in that position, Hibs recently named former Falkirk managing director George Craig as their head of football operations, but the aim is the same, to try to encourage continuity after a change in the dugout.
Dempster added: "There were strong candidates but, after much consideration, Alan emerged as the stand-out choice. He is a driven, intelligent and strong-minded character, who has a clear vision about what he wants to achieve in football - producing positive results, playing attractive football and developing players.
"All those attributes fitted the criteria we required and we're confident Alan is the right man to unite the club and bring success to Hibernian.
"Alan will be our head coach and that is part of the new structure in place at the football club; a continental-style model designed for continued long-term success."