The hiring of Pittsburgh native McCarthy, who won a Super Bowl against the Steelers during his 12-year stint with the Green Bay Packers, comes two weeks after long-standing coach Mike Tomlin resigned.
"We have verbally agreed for Mike McCarthy to become our next head coach," the club wrote on social media.
McCarthy, 62, is best known for his many years with the Packers, where he worked closely with four-time MVP Aaron Rodgers.
Rodgers, 42, played the 2025 season for the Steelers, topping the AFC North before crashing out of the playoffs to the Houston Texans in the wild-card round.
The quarterback has not yet stated whether he wishes to return for another campaign with the Steelers.
McCarthy most recently coached the Dallas Cowboys but failed to agree a contract extension with them after the 2024 season, and did not coach anywhere last year.
Across his career, he has also had various different coaching jobs at the Kansas City Chiefs, the San Francisco 49ers and the New Orleans Saints.
McCarthy becomes just the fourth Steelers head coach since 1969.