Kelly succeeds Jim Mora, who was sacked last week after a 28-23 loss to USC.
"I am thrilled to welcome Chip Kelly to Westwood", Bruins Athletics Director Dan Guerrero said. "Champions Made Here" is more than just a mantra at UCLA, and I'm confident that Chip will lead UCLA Football back to competing for championships.
Kelly brings not only professional experience to a Bruins team in desperate need of a rebuild, but brings along a record of collegiate success, as well.
"It is an absolute honor to join the Bruin Family, and I am grateful to Chancellor Block and to Dan Guerrero for this incredible opportunity", Kelly said in a statement.
Dish Network and CBS end their three-day-old programming fee fight
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Kelly has not coached on the collegiate level since 2012, when he led the University of OR to a 12-1 record and an appearance in the Fiesta Bowl, where it defeated Kansas State by a score of 35-17. Offensive coordinator Jedd Fisch was named interim head coach for the remainder of the season.
Kelly went 46-7 in four seasons (2009-12) leading the Ducks, including reaching the BCS championship game after the 2010 season.
Kelly confirmed the news to ESPN's "College GameDay" Saturday morning.