The 47-year-old, who is currently in charge at Austrian champions Red Bull Salzburg, signed a two-year contract valid until 30 June 2016 and will start work in Leverkusen in the summer.
"I'm really looking forward to the new challenge at a great club and am delighted to be able to work in the Bundesliga," said the former SC Paderborn boss.
Leverkusen parted company with Sami Hyypiä on 5 April after the club suffered a severe post-winter break form dip, having finished the first half of the season in second place on 37 points. Former joint head coach Sascha Lewandowski has taken over first-team duties on an interim basis and has steered the club to a mini-revival as they look to book their place in the UEFA Champions League again next season. Lewandowski will resume his duties as youth team coach once Schmidt arrives.