The 41-year-old former Barnsley and Leeds United boss has agreed a deal at Easter Road until the summer of 2022 and will be assisted by former Scotland defender Robbie Stockdale.
Chief Executive Leeann Dempster told the Hibernian website: "Paul made a really positive impression on us from our first meeting with him.
"His work at Barnsley speaks for itself, where he was able to combine the kind of dynamic, attacking football our own fans appreciate with the development of some talented young players. With the structure we already have in place, Paul is the right person to embrace that support and take it to a new level."
Heckingbottom, whose playing career included spells at Darlington, Norwich City, Bradford City and Sheffield Wednesday, added: "There is so much potential here and the club has everything going for it. I’m looking forward to getting to work and meeting the players and staff on Thursday, before stepping up preparations for Saturday’s game against Hamilton."
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