Pietersen, 28, will lead England against his country of birth South Africa in the fourth Test starting at The Oval on Thursday, the ECB said.
"In choosing a new captain, we were keen to identify a player who could lead the team in all three forms of cricket and bring fresh enthusiasm and ideas to the role of captain," said England chairman of selectors Geoff Miller.
"Kevin is a world-class player who will command the respect of the dressing room and I am sure that he will be looking to lead from the front and work closely with both the players and the coaching staff to bring England success in the future."
"I am very thrilled and excited to have been given the opportunity to captain England," Pietersen said in an ECB news release. "It's a huge honour for me and a terrific challenge for me at this stage of my international career.
"I have learned a great deal about leadership from playing under both Michael and Paul (Collingwood) and fully appreciate the level of responsibility that comes with the job of captaining your country.
"My immediate priority will be this week's fourth Test and I will be devoting all my energies to ensuring the team is properly prepared and plays to its full potential starting on Thursday."
South Africa took an unassailable 2-0 series lead when they defeated England in the third Test at Edgbaston in Birmingham on Saturday.
Vaughan stepped down on Sunday after five years as England's most successful Test skipper with 26 wins from 51 Tests.
Pietersen, born in Pietermaritzburg, Natal, opted to play for the country where his mother was born because he disapproved of South Africa's racial quota system.
He qualified for England in September, 2004, and was selected to tour Zimbabwe where he averaged 104 in three one-day innings. Pietersen was selected to play in the one-day series against South Africa early in 2005 and, in the face of unremitting hostility from the home crowds, struck three centuries in five matches.
He was named ahead of Graham Thorpe to play in the first Test of the memorable 2005 Ashes series at Lord's and marked his debut with two confident half-centuries in a losing cause.
Since then there was no looking back for KP. His switch hits in the recently concluded home series against New Zealand created an uproar in international scene. However MCC - the guardian of cricket's laws - put a lid on contraversy saying it is a legal shot.