The school announced Tuesday it had hired the former Wolverines star quarterback, just two days after he left his job as coach of theSan Francisco 49ers.
"Throughout my life, I have dreamed of coaching at the University of Michigan," a husky-voiced and raspy Harbaugh, reading from a statement, said at a packed news conference. "Now I have the honor to live it."
Michigan interim athletic director Jim Hackett confirmed that Harbaugh signed a seven-year deal worth $5 million per year -- the same salary he received with the Niners. Harbaugh also received a $2 million signing bonus, according to Hackett.
"Our guy came home," Hackett said.
Harbaugh, 51, coached the 49ers to three straight NFC Championship Games. San Francisco lost the 2013 Super Bowl to a Baltimore Ravens team coached by his brother, John. After the 49ers slipped to 8-8 this season and missed the playoffs, he parted ways with the team Sunday in what both sides called a mutual decision.
Now his name is the buzz of the Big Ten.
"Top to bottom, Michigan is about excellence, is about greatness, and you have my pledge that I will carry forward the tradition of excellence of the University of Michigan football program," Harbaugh said.
As a starting quarterback for three seasons under Bo Schembechler, Harbaugh is well remembered for delivering a victory he guaranteed over Ohio State in 1986, the same season he was Big Ten player of the year and finished third in Heisman Trophy voting.
But Michigan has fallen to almost unthinkable depths in recent years. This past season was the third time in seven years Michigan finished with a losing record and the Wolverines failed to reach a bowl. The program has not won the Big Ten since 2004,and its most recent sub-.500 season before this dismal stretch came in 1967, two years before Schembechler began his run as coach.
The famously confident Harbaugh declared, however, that Michigan does not need a turnaround.
"There are no turnarounds at Michigan," he said. "This is greatness."
But Harbaugh has his work cut out for him in a Big Ten East Division that's only getting tougher.
Urban Meyer is preparing the Buckeyes for this week's semifinal against Alabama in the inaugural College Football Playoff. Michigan State's Mark Dantonio has built a program that has staying power. Penn State's James Franklin is a celebrated recruiter who looks to have the Nittany Lions on the rise.
Harbaugh said he wasn't worried about selling the program after some poor seasons.
"I know Michigan football," he said. "I believe in Michigan football. That will not be a hard job."
The 2014 season was particularly dreary. Empty seats became a common sight at Michigan Stadium. Athletic director Dave Brandon stepped down at the end of October, and Michigan dipped to 5-7 under Brady Hoke, among only four Big Teams that did not earn a bowl bid. The Wolverines were 31-20 in Hoke's four seasons and declined steadily after an 11-2 mark in his first year.
Nothing Michigan has tried lately seemed to work for any extended period of time. Rich Rodriguez had tremendous success at West Virginia before taking the Michigan job, but the transition was shaky, with the Wolverines going 3-9 in his first season. Even after his spread offense began to click, his team was too porous defensively to challenge for a conference title.
Rodriguez is now at Arizona, and he took the Wildcats to the Pac-12 title game this season. Hoke took his place at Michigan in a move that was supposed to signal a return to smash-mouth football at the Big House. But after a promising first year, the Wolverines slipped.
Michigan's offense wasn't particularly impressive to begin with, and now the Wolverines must replace two key players before next season. Quarterback Devin Gardner was a senior, and junior wide receiver Devin Funchess is leaving early for the NFL draft. Offensive coordinator Doug Nussmeier is gone, too, headed back to the SEC for the offensive coordinator job atFloridaafter a single season in Ann Arbor.
Harbaugh went 58-27 overall as a college coach at San Diego and Stanford, including a 29-21 record in four seasons with the Cardinal. He took over a 1-11 team when he was hired in December 2006 and quickly turned the program back into a winner and bowl contender.
ESPN.com's Dan Murphy and The Associated Press contributed to this report.
Harbaugh: 'Michigan Is About Excellence'
New Michigan football coach Jim Harbaugh addressed the media at his introductory news conference to discuss why he took the job and his expectations for the program.
Harbaugh's Hiring A Big Moment For Michigan
Desmond Howard and Mack Brown react to Jim Harbaugh's introductory press conference as Michigan's new football coach.
Harbaugh's Michigan Contract Similar To NFL Contract
ESPN Big Ten reporter Dan Murphy breaks down the details of Jim Harbaugh's contract with Michigan.
Saban 'Happy And Excited' Harbaugh Is Back In College Football
Alabama coach Nick Saban comments on Jim Harbaugh's hiring at Michigan.