Lopetegui will take charge on November 14, subject to being granted work permits, with Steve Davis remaining in interim charge ahead of Saturday's home match against Brighton.
Wolves chairman Jeff Shi said on the club's website: "Julen is a top coach, with excellent experience at an elite level of the game, and we are very pleased to have agreed a deal to bring him to Wolves.
"Since the very beginning, Julen has been our number one choice to manage Wolves, and we look forward to welcoming him and his team when they join us in the coming weeks."
Wolves confirmed, if all the necessary paperwork is completed, Lopetegui will take over at Molineux following game against Arsenal, which is the last ahead of the World Cup break.
Davis, Wolves' under-18s coach, took temporary charge of the first team after Bruno Lage was sacked at the start of last month, assisted by James Collins and goalkeeping coach Tony Roberts.
Wolves remain in the bottom three after winning only one game since Lage left, against Nottingham Forest, with their only other point under Davis coming in last week's 1-1 draw at Brentford.