The struggling Barclays Premier League club parted company with Phil Brown earlier this week and Dowie emerged as the leading contender after several other reported targets ruled themselves out of the running.
Dowie, who will be assisted by Steve Wigley and Tim Flowers, has been out of the game since leaving Newcastle where he was assistant to Alan Shearer following the Magpies' relegation.
The former Charlton boss will have just nine games to save the Tigers from relegation.
The club acted quickly to appoint a new manager after deciding to dispense with the services of Brown on Monday. Four successive defeats have left City 19th in the table and three points adrift of safety.
Chairman Adam Pearson believes taking such decisive action now gives the club their best chance of survival.
Pearson said on Tuesday: "We feel that we've got a quarter of the season to go with some winnable games within that.
"It's not a fixture list that's packed full of 'top four' games, it's a fixture list with games where we would expect to get some points.
"We feel that we're best served by making the change now. That will bring a fresh face in, some new impetus and some new focus to get those 14 or 15 points that we're going to need."
Dowie's Hull reign starts with a trip to bottom side Portsmouth on Saturday.