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The former Manchester United midfielder replaces Chris Wilder, who was dismissed on October 3 following five defeats in the first 11 league games of the season.
Carrick will be joined by Jonathan Woodgate as first-team coach, with a further backroom appointment expected in the near future.
Boro chairman Steve Gibson says Carrick is the "perfect fit" for the club, who are just a point above the relegation zone in the Championship.
"We had identified a number of potentials for the vacancy who we spoke with, and were impressed by all, but Michael was the outstanding candidate," he said.
"Michael has the same values as the club, and we are very much aligned in our ambitions."
Carrick's first game in charge will be a trip to Preston next Saturday in the Championship.
This is the 41-year-old's first permanent managerial position since retiring from football in 2018.
He was part of Jose Mourinho and Ole Gunnar Solskjaer's coaching staff at Old Trafford before taking caretaker charge for three games last season.
Carrick is understood to have been recommended by England boss Gareth Southgate, who has a strong relationship with Boro chairman Steve Gibson following his time there as a player and manager.
'Carrick can bring a fresh outlook'
Sky Sports' David Prutton:
"Having distanced himself [previously], the cynic in you is thinking: 'If it didn't sound like the right move straight off the bat, what's happened since then that's got him back up to speed?'. But Middlesbrough is a cracking place, given the history and prestige of the club.
"The chairman Steve Gibson loves the place, he's born and bred, and he has made himself very successful and at times the club has been very successful too. There's been a period of underperforming under several managers, but Michael would come in with a fresh outlook.
"Sometimes, it's looking at the same set of players with a fresh set of eyes. I know that Chris Wilder was frustrated with a lack of transfer activity, but there's still a very workable squad there that shouldn't be anywhere near where it is.
"Michael has learned his apprenticeship at the coalface as it was at Manchester United as an assistant and taking over for a little bit, and that should stand him in good stead."