With Spanish league rules dictating that a coach may only take charge of a club on an interim basis for a maximum of two weeks, Real Madrid confirmed the expected permanent appointment of Solari with a short statement on their official website on Tuesday evening.
Real Madrid are now set to name the 42-year-old as first team manager until the end of the term after winning his last four games.
Solari won two league titles and the 2001-02 Champions League during five years at the club as a player and was in charge of the reserve side before taking control of the first team on October 29.
Other previous managers that made their mark at Real Madrid include Paco Bru, in 1934, with a goal difference of +4. "Real Madrid have worked out his contract and there are no problems".
The last of those, a 5-1 thumping at the hands of Barcelona, proved the final straw for club president Florentino Perez but the team have rebounded under their new coach.
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He takes over permanently with Madrid sixth in LaLiga, four points behind leaders Barcelona.
"He has done excellently", Madrid club director Emilio Butragueno said on Sunday night.
"Everything goes very quickly, the important thing is the day to day". It's a great opportunity.
Solari's maiden match as long-term boss is the trip to Eibar in La Liga on Nov 25, following the global break.