Muschamp, who just finished his third season at Texas, where he was the head-coach-in-waiting to succeed Mack Brown, replaces Urban Meyer at Florida.
"This is a dream come true to be the head coach of the Florida Gators," Muschamp said in a statement released by the school. "I grew up watching the Gators and whatever other SEC team was on television. I have great memories watching SEC football with my father on Saturdays and playing football in the back yard with my two brothers right here in Gainesville."
Florida scheduled a news conference for Tuesday at 6 p.m. ET at Ben Hill Griffin Stadium to introduce Muschamp.
Muschamp, who spent 10 years in Gainesville as a child, was the only person interviewed by Florida athletic director Jeremy Foley.
"Coach Muschamp is someone we targeted from the beginning and he is the guy we wanted," Foley said in a statement. " ... When we started the search for our next head coach we wanted a coach who was familiar with the Southeastern Conference. We wanted a candidate who was a relentless recruiter and was familiar with recruiting in the state of Florida. We wanted a candidate who was high energy and had been on the big stage. We wanted a candidate who was respected by his players and his peers and we wanted someone who had a passion for the University of Florida.
"Coach Muschamp is all of those things and more. He is a grounded family man with a wonderful wife and two children and we welcome them into our Gator family."
Muschamp leaves one of the nation's premier programs for another. Between them, Texas and Florida have won three national championships since 2005.
But both teams fell on hard times this year. The Gators were 7-5 and Texas fell to 5-7 in Brown's first losing season with the Longhorns.
Meyer resigned Wednesday, citing family reasons. Meyer will coach the Gators in the Jan. 1 Outback Bowl against Penn State in Tampa.
The 46-year-old Meyer led the Gators to two national titles but briefly resigned last December, citing health concerns. He had been hospitalized with chest pains after the Gators lost to Alabama in last season's Southeastern Conference championship game.
Muschamp was one of top-earning assistants in the country with a $900,000 annual salary. His previous stints as an assistant coach include LSU and Auburn and the Miami in the NFL.
Muschamp's move to the Gators leaves Brown with another hole to fill on his staff. On Monday, Texas offensive coordinator Greg Davis resigned and offensive line coach Mac McWhorter and special teams coordinator and defensive line coach Mike Tolleson retired.
Texas hired Muschamp away from Auburn before the 2008 season and Texas went 25-2 in his first two seasons. He had not yet finished his first season with the Longhorns when the school announced it had offered him the coach-in-waiting position even though Brown said he had no plans to retire.
That made some wonder if Muschamp would be willing to wait and the offer from Florida, with it's pedigree, top-flight facilities, proximity to top high school athletes and its history in the Southeastern Conference, was too good to pass up.
Former Florida quarterback and Heisman Trophy winner Tim Tebow wrote on Twitter: "[Welcome] to the [Gator] family Coach Muschamp! You'll soon find out why it's great to be a Florida Gator! God bless and Go Gators."