Former Hatters favourite Waddock takes charge at Oxford
He joins from MK Dons where he was head of coaching and has signed a contract until the end of the 2015-16 season.
Waddock said: “I’m excited, it’s a big club.
“The club is in a very healthy position in the league table and we have some exciting games coming up.
“It will be a challenge, but it’s one I’m really looking forward to.”
It marks the end of an eight-week search for U’s chairman Ian Lenagan to find a replacement for Chris Wilder.
He added: “We see it as a long-term appointment.
“Gary’s CV brings the exact mix of attributes we stated we were looking for.
“He’s had success as a manager in the lower leagues, top-class coaching experience, understanding of sports science and a track record of playing attacking football and developing young players through to the first team.”