The 47-year-old will begin his new role on July 1.
The American moved from MLS club New York Red Bulls in 2018 to take an assistant coach role at RB Leipzig under Ralf Rangnick before becoming Salzburg head coach in 2019 on a three-year deal.
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Marsch led Salzburg to a league and cup double in his first season. This campaign the champions are currently six points clear at the top of the Austrian Bundesliga ahead of Rapid Wien with four games to go and will meet LASK Linz in the Austrian Cup final.
“In Jesse Marsch, we have been able to recruit our main head coach and quickly fill the most important position in the sporting side of the club with a top coach,” said Leipzig CEO Oliver Mintzlaff.
“Jesse has been part of the Red Bull football group for over six years now and has done incredible work in all his roles so far, constantly developing step-by-step.
“It’s of course a great advantage that he already worked for a year at RB Leipzig. Jesse knows the club, the city of Leipzig and, above all, the club and playing philosophy.”
This season Leipzig are in second place in the Bundesliga, seven points behind leaders Bayern, with three games remaining. They are also through to the last four of the German Cup.
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