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The 46-year-old played in three Ryder Cups, was vice-captain in 2010 and 2012 and holed the winning putt in 2002.
McGinley was preferred to Ryder Cup legend Colin Montgomerie, who captained a victorious European team in 2010 and wanted to fulfil the role again.
"This is a position I'm really thrilled to be in," said the Dubliner, Ireland's first Ryder Cup captain.
"It's also a very humbling experience and I can't wait to get into the role of captain and to working with the players."
World number one Rory McIlroy and Ryder Cup stalwarts Luke Donald and Justin Rose all publicly backed McGinley.
Darren Clarke, the 2011 Open champion, was also in the frame but formally requested not be considered last week.
The decision was made by the European Tour's tournament committee, led by chairman Thomas Bjorn, after a meeting in Abu Dhabi.
Montgomerie, who played in eight Ryder Cups, was a late contender but seen by some as a bigger name than McGinley and better able to oppose American choice, eight-time major champion Tom Watson.
But in recent times Europe have taken the view that the Ryder Cup captain should serve for one match only, with Bernard Gallacher ('91, '93 and '95) the last man to lead the side more than once.
A winner of four European Tour titles, McGinley's best campaign was in 2005 when he finished runner-up three times before lifting the season-ending Volvo Masters crown.
And while the Dubliner may not have had as much individual success as eight-time European number one Montgomerie, many felt he did enough as a vice-captain (in 2010 and 2012) and as Britain and Ireland's two-time winning Seve Trophy captain to indicate he has the ability to lead Europe.
In 2009 McGinley, Ireland's first captain in the event, cajoled a supposedly weaker GB and Ireland team to a 16½-11½ victory over a continental Europe side led by Bjorn.
Fact file
Born: 16 December 1966
Country: Republic of Ireland
Ryder Cup record: 3 appearances, 9 matches, 4½ points, vice-captain 2010, 2012
Ryder Cup high point: Hit winning putt in 2002
European Tour wins: 4 (plus five other pro titles)
