Marcello Lippi was named on Friday as Italy's new coach, starting on July 16.
The former Juventus coach will take over the day after Giovanni Trapattoni's contract expires, Italian football federation president Franco Carraro said.
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Carraro told reporters: "As president of the football federation I must thank Giovanni Trapattoni for his rectitude.
"I hope Marcello Lippi will be able to qualify Italy as quickly as possible for the 2006 World Cup finals."
Trapattoni, 65, had been widely expected to stand down at a federation board meeting on Friday following Italy's early exit from Euro 2004.
But despite Italy's disappointing display in Portugal, Trapattoni was unwilling to resign before his contract ran out, insisting his team were among the top four or five in Europe.
Italy finished only third in Group C despite their 2-1 win over Bulgaria in their last match.
Trapattoni took over from Dino Zoff following Italy's defeat by France in the Euro 2000 final and suffered disappointment at the World Cup two years ago when his team were eliminated in the second round by South Korea.
Lippi, 56, won five Serie A titles in two spells with Juventus as well as a Champions League crown, the European Supercup and the Intercontinental Cup.