“Our guy came home,” interim athletic director Jim Hackett said during a news conference in Ann Arbor, Mich.
Harbaugh and the San Francisco 49ers mutually parted ways Sunday after four seasons that included one appearance in the Super Bowl and three in the NFC championship. There had been speculation that Harbaugh would return to his alma mater ever since Michigan fired Brady Hoke early this month.
"Throughout my life I have dreamed of coaching at the University of Michigan," Harbaugh said. "Now I have the honor to live it."
According to Hackett, Harbaugh's contract is for seven years and more than $35 million -- and that's not including a $2-million signing bonus.
Harbaugh is 58-27 as a college coach with stints at San Diego and Stanford. With the Cardinal, he inherited a 1-11 team and turned it into an Orange Bowl winner before leaving for the NFL after four seasons.
Now he faces another such task with the Wolverines, who went 5-7 this season and did not play in a bowl for the third time in seven years.
"Top to bottom, Michigan is about excellence, is about greatness, and you have my pledge that I will carry forward the tradition of excellence of the University of Michigan football program," Harbaugh said.
He added: "There are no turnarounds at Michigan. This is greatness."