Rooney recently called it an end to his coaching job in the MLS after leaving D.C. United and taking up a new offer.
Tom Brady, a co-owner of Birmingham, had frequent conversations about the position with Rooney recently.
The former England star has now been appointed to become their new manager by Championship side Birmingham City.
Birmingham City announce Rooney
Birmingham City have announced Wayne Rooney as their new manager according to reports from the Sun.
A Birmingham statement said: "Birmingham City Football Club is delighted to announce the appointment of Wayne Rooney as Manager, agreeing terms on a three-and-a-half-year contract."
The legendary player is confident that he can entice star players to the Blues and eventually guide them back to the Premier League.
On his appointment, Rooney said, "I am absolutely delighted to be joining Birmingham City Football Club at such an exciting time.
"It is very clear that they have a plan and are committed to realising their ambition for the club. We are fully aligned on what is expected.
"I have been building my managerial career, putting myself in challenging environments, to get me ready for this opportunity.
"It’s a project that gives me a sense of purpose and I can’t wait to get started."
Ashley Cole and John O'Shea, two former teammates at Manchester United, have joined Rooney as coaches.
The 37-year-old is anticipated to lead his first practice tomorrow and Michael Carrick’s Middlesbrough will be his opponent in his debut game in charge.