The 50-year-old American has been without a job since being fired by Leeds in February last year with the club struggling near the foot of the English Premier League. Marsch had been touted as a possible United States head coach to replace Gregg Berhalter.
Berhalter was eventually re-appointed to the role. However Marsch, who also coached New York Red Bulls, Red Bull Salzburg and RB Leipzig earlier in his career, will now aim to build on the steady improvement shown by Canada under predecessor John Herdman.
Herdman, who led Canada to the 2022 World Cup, departed last year to take over as coach of Toronto FC. Canada Soccer said in a statement on Monday that Marsch would now take the helm immediately on a contract that runs through to the end of the 2026 World Cup, which will be hosted by Canada, Mexico and the United States.