Riley previously served as the head coach at Oregon State, where he led the Beavers to a 93-80 record and eight bowl appearances over 14 seasons. In 2014, Oregon State went 5-7 with a 2-7 mark in the Pac-12 conference.
The 61-year-old was named the Pac-10 coach of the year in 2008 after leading Oregon State to a 9-4 record. The Beavers' win total has declined over the past three seasons -- from nine in 2012, to seven in 2013 to five this season.
"It is truly an honor to join the University of Nebraska family," Riley said in a statement. "Though we love Corvallis and Oregon State, this is a once-in-a-lifetime opportunity to coach at one of the nation's most storied football programs and I can't wait to get started. My sincere thanks to Chancellor Perlman and Shawn Eichorst for their confidence in me and I look forward to becoming a part of the Nebraska family and building upon the great history and tradition."
Other names floated as potential candidates for the Nebraska job included Oregon offensive coordinator Scott Frost, Ohio State offensive coordinator Tom Herman and Minnesota coach Jerry Kill.
Notice of Riley's hire comes less than a week after Nebraska announced it had dismissed Bo Pelini following seven seasons. Nebraska, which joined the Big Ten from the Big 12 in 2011, has gone 9-3 this season.