The Paderborn boss has signed a two-year contract and replaces Roberto Di Matteo after the Italian was sacked in May
The 41-year-old replaces Roberto Di Matteo, who was sacked in May after less than 12 months in charge.
Schalke sporting director Horst Heldt said: "We are very happy, we've found the right coach for Schalke in Andre Breitenreiter.
"Paderborn have risen sensationally under Andre Breitenreiter, who has worked very hard and successfully in spite of extremely modest means.
"After the departure of Roberto Di Matteo, I have emphasised what we expect from our new coach:
attractive, passionate attacking football and a team spirit, which will match the enthusiasm of our supporters."
Di Matteo was appointed Jens Keller's successor in October and guided the club to the Champions League quarter-finals, but failed to qualify for the competition next season after finishing sixth in the Bundesliga.
Breitenreiter, meanwhile, was relegated from Germany's top flight with Paderborn last season after winning promotion in 2013-14.

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