A club statement said the 44-year-old would be presented to the media on Monday after agreeing to take over at Molineux.
"Following talks with Stale Solbakken I am happy to confirm that he has agreed to become our next manager," Wolves chief executive Jez Moxey confirmed in a brief statement on the club's official website.
The BBC earlier reported that interim manager Terry Connor, who took over the reins following the sacking of Mick McCarthy earlier this season, would remain with the club in a backroom position.
Solbakken, who was sacked by relegated German outfit Cologne last month, once played for Wimbledon and earned 58 caps for Norway. He won a host of titles in Denmark with FC Copenhagen - including five league crowns.
Wolves appointed the inexperienced Connor after dismissing McCarthy in February but the rookie was unable to halt the club's slide down to the Championship after failing to win any of his games to date.
Source: AFP
Source: AFP