Leicester won the title under Claudio Ranieri in 2015-16 but parted company with the Italian in February and despite a good recovery under Shakespeare at the end of last season, they are only a point above the relegation places this term.
Giggs eyes coaching role at Everton, Leicester
Puel, 56, also a former manager of Monaco, Lyon and Nice in France, will take charge of his first game on Sunday when the Foxes host Everton at the King Power Stadium.
"When we began the process of identifying a new manager, the board quickly established the profile of candidate we needed to take the club forward and Claude Puel was a perfect fit," said Leicester City vice-chairman Aiyawatt Srivaddhanaprabha. “Upon meeting Claude, his attention to detail, knowledge of our squad, understanding of our potential and his vision to help us realise it were extremely impressive. He quickly emerged as the outstanding candidate and I am delighted we will have the opportunity to reinforce our long-term vision, aided significantly by his expertise."
The Frenchman, who was dismissed by Southampton in June after just one season in charge despite finishing eighth in the Premier League, said it was a "great privilege" to become the new Leicester manager.
Shakespeare backs struggling Iborra to shine
"The opportunity to help the club build on its remarkable recent achievements is a truly exciting one and I'm looking forward to working with the owners, players, staff and supporters to deliver further lasting success," he said.
Puel also has European pedigree, steering Lyon into the Champions League finals semi-finals in 2010 -- masterminding a 2-1 aggregate win over Real Madrid along the way.
Leicester shocked the football world two seasons ago by seeing off the Premier League powerhouses to secure the title, with the likes of Jamie Vardy and Riyad Mahrez stealing the headlines.
But despite reaching the Champions League quarter-finals last year, Leicester struggled in the league until a late-season flourish lifted them to 12th in the table.
This season has been another struggle, with just two wins in their first nine fixtures, although they eased the pressure at the weekend with a 2-1 victory at Swansea City, which lifted them to 14th in the table.
Shakespeare, 53, was promoted from his role as assistant coach on an interim basis following the shock dismissal of Ranieri and in June he was handed a three-year contract.
Puel will be supported by Michael Appleton, who retains his role as assistant manager.
COMMENTS
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ