The former Leicester City manager has signed a two-and-a-half year contract at the Reebok and will take charge of team affairs from Sunday's match against Aston Villa.
Wanderers' chairman Phil Gartside said: "We have been able to interview a number of quality candidates and have taken into consideration all the factors which we consider applicable for the post and, after due consideration, decided to offer the post to Gary Megson.
"We feel Gary is the right man to take Bolton Wanderers forward. I have paid particular attention to his career and he has demonstrated to me that he is prepared to roll his sleeves up and has the right temperament for a battle, which this season is undoubtedly going to be.
"We have made decisive decisions over the past few weeks and this is one of them. It is not about me, Gary Megson or any other individual. It is all about Bolton Wanderers surviving in the Premier League.
"We have to be fully-focussed on the task ahead to make sure we achieve immediate success. I have spoken to the staff and the players and we are all committed to get behind Gary and turn our fortunes around."
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