The contract was also signed by Vitaly Mutko, the president of the Russian Football Union, which approved Hiddink's candidacy for the position on Wednesday.
Hiddink, 59, said after the signing of the agreement that he had been studying Russian soccer and individual players before deciding to take the post. He said it was early for him to make any analysis, but that Russian players had great potential.
The new coach said he would start his work with the team after the 2006 World Cup in Germany, scheduled for June 9 through July 9.
He is currently coaching Dutch club PSV Eindhoven and Australia's national team, but has already said he will leave both posts at the end of the season.
Hiddink said he planned to closely cooperate with coaches of Russian soccer clubs to find their opinion of players who play for the national team. Hiddink said he believed that the team was capable of reaching a new level and take a leading position in European soccer.
Mutko said in turn that the RFU would do everything possible to avoid problems for Hiddink.
"The RFU will do everything possible so that Hiddink will have no organizational, technical or other problems," Mutko said.
"Guus is a very important person for Russian soccer. He will help us to unite around a common idea, and bring authority back to Russian soccer."
The RFU President said that Hiddink would also help to develop Russia's under-21 soccer teams. He added that Hiddink would work not only as team coach, but also help develop a unified training system.
"We want all youth soccer teams to play the same soccer," Mutko said earlier this week. "We intend also to create a single selection system."
Russia's national team failed to qualify for this year's World Cup in Germany in a campaign that saw a new nadir, when the team was thrashed 7-1 by Portugal in October 2004. Although performances subsequently improved, it was not sufficient to save coach Yury Syomin, one of the country's most respected managers, who resigned after the last game.
Many experts showed surprise when Hiddink took the helm of the Korean national team in 2001, but they were more surprised when the Korean team reached the semifinals of the 2002 World Cup in Japan and Korea, where they lost to Germany.
