The 49-year-old returns to work in Italy after being dismissed by Chelsea at the end of last season.
He spent two years at Stamford Bridge, where he won the Premier League and FA Cup, having previously claimed three Serie A titles as boss of Juventus.
Under Spalletti, Inter finished fourth in the league and qualified for the Champions League.
"A new chapter in my life is beginning, I'm really excited," the former Juventus and Italy midfielder said.
"I have chosen Inter because of the club it is, because of how ambitious it is.
"I was struck by the club's transparency and the desire to bring Inter back to where it belongs."
Inter president Steven Zhang said he was "sure Antonio Conte is one of the best coaches out there".
"I'm certain he'll help us achieve our objective and fulfil our mission, one which has always remained the same: to make this club one of the best in the world again."