The former Manchester City boss has agreed a two-year contract with the Football Association, which makes him in charge until the 2009 European Championships in Sweden.
Pearce staked his claim for the job by taking England to the semi-finals of the tournament last month in Holland where they lost in a marathon penalty shoot-out to the hosts.
He was given the job on a part-time basis earlier in the year but was effectively full-time after getting sacked by City the day after the Premier League season finished.
Sir Trevor Brooking, the FA's director of football development, had talked about the new role encompassing lower age groups and forging close links with club academies.
Brooking had previously described how impressed the FA were with Pearce's work in Holland, which started with David Bentley withdrawing through fatigue and leaving the squad a man short.
Pearce switched the formation of the team effectively and also kept faith in Leroy Lita, who missed a penalty and an open goal early in the tournament but ended up second in the goalscoring charts. Tweet
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Good luck Phycho, shame it didn't work out, I for one wanted you to succeed @ City
As a City Fan who endured the dire quality of football that was served up last season, I hope that Stuart is able to make a success of his role with the England under 21's. He certainly showed enthusiasm in his role as our Manager, but equally he was limited in terms of his tactics and his team selections. However, we had the right to expect more from his team, especially as the biggest failures were the players that he had brought to the club. Finally, it is interesting that a man who previously went to great lengths to say that he didn't need a contract with the club, was keen enough to put pen to paper with England. At least they will be good for some compensation if it doesn't work out !!