Media reports this morning suggest the former Tottenham manager will be handed a £1 million bonus if he can stave off relegation at Loftus Road - on top of the £3m a year, he has apparently agreed with the club.
Reknapp will apparently watch his new club in action against Manchester United in the Premier League today at Old Trafford, but will not take charge of the team until after until after the match with Mark Bowen and Eddie Niedzwiecki choosing the team. QPR have not won at Old Trafford since New Year's day 1992.
Redknapp's appointment comes 24 hours after Mark Hughes was sacked as manager.
“I’m delighted to be back in the managerial hotseat at QPR," Redknapp told the club's website.
“When I spoke to the shareholders and they told me about their plans I knew this was too good an opportunity to turn down.
"There’s no doubt there’s a lot of ability in the squad, but for one reason or another things haven’t gone as well as everyone expected since the start of the season.
“I can’t wait to get to work and get the results necessary to kick-start our season.”
QPR Chairman Tony Fernandes said: “Harry was our number one target, the unanimous choice of the Board and we’re delighted we’ve been able to attract him to the club.
“He has a proven track record in the Premier League and has all the characteristics we were looking for to get us out of the current situation we find ourselves in.
“His man-management skills are second to none and we are confident he is the right man to lead us away from the bottom of the table.
“We believe we have a manager with significant experience at the highest level of football, who can come in and immediately help deliver our objectives.”
QPR sacked Mark Hughes earlier on Friday, having taken just four points from 12 matches this season. They are the only club without a win in all four professional divisions in England.
Club owner Tony Fernandez publicly backed Hughes, although there was a change in tone after Saturday's home defeat by lowly Southampton left them four points adrift at the bottom.
"Mark Hughes is a top, top manager and a great guy as well," said Redknapp. "He was just unlucky and they just couldn't get the results they needed.
"If I can manage to keep them up I will be the happiest man around. But it won't be easy for sure".
"I fancy getting back into the Premier League. QPR is a good club, with great fans and a great atmosphere," added the former West Ham United player, who was sacked by Spurs in June despite leading QPR's London rivals to fourth place last season.
"It's a privilege to go there (QPR) and manage them. I'm looking forward to the challenge. It will be a tough job to take on but I am up for the challenge," he said.
"There's some good players there and I have obviously got to find a way of picking a team that can win some games.
"They have gone 12 games without a win so you couldn't have too many worse starts than that. I am going to go in and give it my best shot and if it works it will be fantastic."
The Ukrainian Football Federation said earlier this week that they wanted Redknapp to take charge of the national team.
"The (Ukraine) job was exciting. Something I had never done in my life before. To go abroad and coach was something I was really up for," said Redknapp.
"Yesterday (Thursday) I was sort of almost on my way to the Ukraine. It was something I really fancied doing.
"When we got the phone call today to say we'd like to talk to you it changed everything around really," added the former Bournemouth, West Ham, Portsmouth and Southampton manager.
"If everything gets sorted, and I'm sure it will, I'll be in Sunday morning, will have the team in training on Monday, then fly up to Sunderland."
Redknapp, who hopes to have his former Tottenham assistants Kevin Bond and Joe Jordan working alongside him at QPR, enjoyed an eventful four-year spell as Spurs manager.
He took the north London team from the bottom of the league to victories over European giants in the Champions League.
Redknapp was heavily linked to the England job before the Football Association appointed Roy Hodgson in May.