Englishman Julian Fountain would be the fielding coach, the PCB said. The two men would take immediate charge of the team and prepare them for the Asia Cup tournament later this month.
"We have reached an agreement with Whatmore who will be the new coach of the Pakistan team for the next two years," PCB chairman Zaka Ashraf told reporters.
"We feel that a foreign coach can best exploit the talent available in Pakistan cricket."
Whatmore, who led Sri Lanka to victory at the 1996 World Cup, said he was looking forward to the challenge, adding: "We will do our best to produce the best results with our available talent and I am confident of good results."
Whatmore, 57, played seven tests for Australia and enjoyed a successful coaching spell with Bangladesh, leading them to their first test match and subsequent series win in 2005.
Pakistan have had three foreign coaches in the past - Englishmen Richard Pybus and Bob Woolmer and Australian Geoff Lawson.
Chief selector Mohsin Khan had been in place as interim Pakistan coach after Waqar Younis resigned in September for personal and health reasons.
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Foreign coaches, foreign cars, foreign appliances, foreign killers, foreign undercover cops, foreign houses, foreign influence, foreign everything. Now bring foreign politicians and army too!!