Kelly replaces Andy Reid, who was fired on Dec. 31 after a 4-12 season.
The 49-year-old Kelly, who was 46-7 in four years at the University of Oregon, interviewed with the Eagles, Cleveland Browns and Buffalo Bills after leading Oregon to a victory over Kansas State in the Fiesta Bowl. But he opted to remain at Oregon before changing his mind.
The Eagles are known to have interviewed 11 candidates, including two meetings with Seahawks defensive coordinator Gus Bradley. Philadelphia has won just 12 games the two seasons, after winning the NFC East in 2010.