The 45-year-old, three times a player in the biennial contest, becomes the first Scandinavian to be handed the captaincy.
“We had terrific candidates. The three past captains were the key decision makers in selecting Thomas,” European Tour chief executive Keith Pelley said.
“They put a great case together for Thomas...we are thrilled to have one of the great Danes as our Ryder Cup captain.”
Bjorn was an assistant to Darren Clarke at Minnesota's Hazeltine National this year, when Europe lost 17-11 as the Americans ended a run of three successive defeats.
The Dane, also an assistant in 2004, 2010 and 2012, played in the Cup in 1997 under Seve Ballesteros and in 2002 and 2014.
“It's amazing...I watched a lot of captains as a player and as a vice-captain and I always wondered what that feeling would be like to be the man in charge, and heading a team of 12 great players,” Bjorn said.
“Now it's my turn to do it. To lead them out will obviously be a great honour.”
Bjorn, who becomes only the fourth skipper from continental Europe, and Ireland's Padraig Harrington were seen as frontrunners for the job.
The three past captains in the decision-making process were Clarke, Paul McGinley and Jose Maria Olazabal.
A 15-times European Tour winner, Bjorn knows the host venue well after playing there 14 times in the Open de France with a best finish of third in 2007.
“Thomas has many wonderful characteristics which he will bring to the role of captain,” said Pelley, highlighting the Dane's experience and commitment as the first two.
“Thirdly, he has passion. Not only for this wonderful game, but for the European Tour and Team Europe and he wants the Ryder Cup to be the greatest sporting event it can be,” he added.
“So when you look at these characteristics, I am convinced they will make him a great Ryder Cup captain.”
Some of that passion was evident in 2006 when Bjorn branded captain Ian Woosnam as “barmy” and “pathetic” for choosing Lee Westwood as his second wildcard instead of him.
Woosnam acknowledged that Bjorn, who later apologised, “wasn't a happy chappy when I told him”.
Original source: Bjorn named Europe’s Ryder Cup captain