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The 54-year-old has signed a multi-year contract with the Irish Premiership club after previous managerial roles with Forest Green Rovers and Inverness Caledonian Thistle.
He has been tasked with leading Glentoran, who last won the league title in 2009. Ferguson said: "I am delighted to become manager of Glentoran. This is a big club with a tremendous history, and it is a great opportunity for me.
"I understand the responsibility that comes with the job. I want to win trophies here. Glentoran should be challenging for the title and every cup and shield we enter.
"I know that success here will be judged on what we win."
Joining him as assistant will be Gary Bollan, his former Dundee United teammate, who he previously worked with at Inverness. Ferguson added: "The more I spoke with Ali and Paul (Millar, sporting director), the more I wanted the job.
"Their ambition matches my own, and I am looking forward to getting onto the training pitch, working with the players, and seeing what we can achieve together."
Ferguson replaces Declan Devine, who departed in September, and will make his managerial debut at home against Ballymena United on Saturday.