The 64-year-old, who engineered Brazil's 2002 World Cup success, has been named as the successor to Mano Menezes, who was sacked last week.
The former Chelsea manager is charged with leading the bid to bring a sixth World Cup success to the nation when they host the tournament in 2014.
"I feel more motivated, younger, I feel I'm capable," said Scolari. "
We have the obligation to win the title.
"We are not favourites at the moment but we intend to become favourites during the competition. Third or fourth place is no good for a country that has won five World Cups."
Scolari will be assisted by Carlos Alberto Parreira, who led Brazil to their fourth world title in 1994, after he was named as technical director.
Brazilian football chief Jose Maria Marin said: "Our sole commitment is to seek out and offer the best for our football.
"It is in this vein that we have chosen these two great champions, respected not just in our country but worldwide."