The team announced the hiring Thursday, a day after finalizing the deal to have Del Rio replace interim coach Tony Sparano. A news conference is expected Friday.
Del Rio becomes Oakland's ninth head coach since the start of the 2003 season. The Raiders have the NFL's worst record in that span, having failed to produce a single winning season or playoff berth.
Sparano had been elevated from offensive line coach during the past season to replace the fired Dennis Allen and had hoped to keep the job. Oakland went 3-9 under Sparano after losing the first four games under Allen.
"After a thorough interview and evaluation process, we are excited to announce Jack Del Rio as the head coach of the Oakland Raiders," owner Mark Davis said in a statement. "I have no doubt that he will make a significant impact and help reach the goal of everyone in this building, which is to win championships."
The Raiders interviewed at least seven candidates but only Del Rio got a formal second interview. He emerged as the favourite after Denver's season ended Sunday with a playoff loss to Indianapolis and he got the job a few days later.
This marks the second straight time the Raiders hired a Denver defensive co-ordinator as their coach. Allen spent one year running the Broncos defence before being hired by general manager Reggie McKenzie in 2012. He went 8-28 before getting fired last season.
Del Rio grew up in the East Bay, went to Raiders games as a kid and even played a high school championship game at the Coliseum. His parents are still season-ticket holders and now will get the chance to watch their son coach their favourite team.
Del Rio has been defensive co-ordinator in Denver for the past three seasons, helping the Broncos win three straight AFC West titles.
Denver ranked third in total defence and tied for 16th in scoring defence this past season. The Broncos were third in total defence and 10th in scoring defence in Del Rio's three years with the team.
Before that, he was head coach in Jacksonville for nine seasons. Del Rio had a 68-71 regular-season record with the Jaguars and made the playoffs in 2005 and 2007, winning one playoff game in his second post-season trip. He was fired with five games remaining in the 2011 season.
"Jack Del Rio brings a strong leadership presence to this organization," McKenzie said. "He has developed an excellent reputation as a coach in this league and we are happy that he is a Raider."
Del Rio's tenure in Jacksonville was marked by the inability to find a topflight quarterback or pass rusher. The Jaguars had eight starting quarterbacks during that time and only once did one throw at least 20 TD passes in a season — David Garrard had 23 in 2010.
He also never had a player record more than 10 sacks.
Those two positions are the bright spots on the Raiders with rookies Khalil Mack and Derek Carr looking like building blocks for the franchise. Mack, the fifth overall pick last year, was one of the top outside linebackers in the league last season and had 52 quarterback pressures, according to Pro Football Focus.
Carr, a second-round pick, became the first Raiders quarterback to start all 16 games since Rich Gannon in 2002 and the seventh rookie ever to throw for at least 3,000 yards and 20 touchdown passes in a season.
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