Capello replaces Dick Advocaat, who signalled his intent to quit the post prior to the country's disappointing Euro 2012 campaign.
The Russian Football Union deputy president Nikita Simonyan revealed the Italian will travel to Moscow shortly to sign his contract.
"Today we decided to appoint Capello as our national team's new manager," Simonyan said.
"We expect him to come to Moscow in the nearest future to finalise the details of his contract and sign it."
Capello has been out of work for just five months following his resignation as England coach on February 8.
Capello is relishing the challenge of guiding Russia.
"If everything is completed in the best possible way, as the announcement from the Russian Federation states, I will be happy and proud," Capello told Italian news agency ANSA.
"If, as I believe the case will be, all goes as planned in terms of the contract, it will be a splendid adventure.
"Russia are a great nation."