The former Paraguay boss replaces Tito Vilanova, who stepped down as Barcelona manager to continue with his treatment for cancer.
Martino was most recently in charge of Newell's Old Boys, who he led to the Argentine Clausura title last season.
He becomes the fourth Argentine to manage Barcelona after Helenio Herrera, Roque Olsen and Cesar Luis Menotti.
A number of coaches had been linked to the vacant position, including former Barcelona B boss Luis Enrique, Tottenham's Andre Villas-Boas, Swansea's Michael Laudrup and Guus Hiddink who quit as Anzhi Makhachkala coach on Monday.
Barcelona have ignored more high-profile candidates in favor of Martino, who is considered to have a similar style to former Athletico bilbao manager Marcelo Bielsa.
Barcelona captain Carles Puyol says Martino's managerial style will fit in with the playing philosophy at the Nou Camp.
"We know about his career, he is a very good coach," Puyol said before Martino's appointment was confirmed.
"He likes Barcelona's playing style. I think all the names mentioned are capable of coaching this team.
Martino will be looking to win the La Liga like Tito Vilanova did last season and also seek to improve Barcelona’s performance in the Champions League after they were thrashed an aggregate of 7-0 by eventual winners FC Bayern Munchen.
