The appointment ends Leipzig's months-long search for a permanent replacement after parting ways with Marco Rose in March. Interim coach Zsolt Low took the reins for the remainder of the campaign that ended in a disappointing seventh-placed league finish.
Werner, 37, who had recently declined to extend his contract at fellow Bundesliga side Werder Bremen, will coach a Leipzig side who will compete only in domestic competitions next season after failing to secure European qualification for the first time since 2016.
"Ole is a young, ambitious and extremely ambitious head coach who will take the next step in his development with us," said Leipzig managing director Marcel Schafer in a statement.
"RB Leipzig stands for a bold, attacking style of play with a clear identity, as well as professional and ambitious thinking," Werner said.
"The club has big goals and high expectations and this is exactly the kind of environment that convinced me and one to which I want to contribute."
