"The NZS executive board decided unanimously to appoint Katanec instead of Slavisa Stojanovic who parted company with the national team by mutual consent in December," the Slovenian FA said.
"Katanec's contract runs until the end of Slovenia's Euro 2016 campaign and his first game in charge will be a friendly against Bosnia in Koper next month."
Once a gifted defensive midfielder, Katanec scored five goals in 31 games for the former Yugoslavia and featured in the squad that reached the 1990 World Cup quarter-finals.
He played the last five games of his international career for Slovenia after the country gained independence in June 1991.
Following his successful first coaching stint with Slovenia from 1998-2002, Katanec had mediocre spells with Greek side Olympiacos as well as Macedonia and most recently the United Arab Emirates.
The 49-year-old, who played for Partizan Belgrade, VfB Stuttgart and Sampdoria, now faces a tough task of rekindling Slovenia's slim hopes of reaching the 2014 World Cup finals after a poor start.
The team are fifth in Group E with three points from four games, seven adrift of leaders Switzerland. Their next World Cup qualifier is at home to Iceland on March 22.