Frenchman Bruno Metsu was sacked following Qatar's exit at the quarter-final stage of premier Asian competition in Doha last month.
Rajevac had a successful international stint with Ghana, whom he led to the finals of the Africa Cup of Nations and to the quarter-finals of last year's World Cup.
Qatar Football Association president, Sheikh Hamad bin Khalifa bin Ahmed Al Thani, has expressed his delight at his appointment.
"We wanted to have a good coach to replace (Bruno) Metsu and we know that (Milovan) Rajevac is a great coach," he said.
"He has previous experience of working in Qatar as his compatriot Bora Milutinovic's assistant at the Al Sadd Club (2004-05) and this should help him a lot."
The 57-year-old quit Ghana after the World Cup and joined Saudi Arabian outfit Al Ahli before moving to Qatar.
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