Pereira has signed an 18-month contract at Molineux after compensation was agreed with Saudi Pro League club Al Shabab where the 56-year-old had been coaching.
Pereira, who has also managed Porto, Olympiacos and in the Chinese Super League with Shanghai SIPG during a globetrotting coaching career, took training on Thursday and will be in charge of Sunday's crunch visit to Leicester.
Chairman Jeff Shi, who has been on the receiving end of criticism from fans, said: "We are delighted to welcome Vitor Pereira to Wolves as the new head coach of our men's first team.
"Vitor is a highly respected and experienced coach who has achieved success across different leagues and will bring a new approach for the test ahead.
"This is a challenging moment for the club, and we want to thank Vitor for taking on this responsibility.
"We have full confidence in his ability to guide us back on track, alongside the players and staff, and the entire club will be united in supporting him to achieve success."
Pereira inherits a team in dire trouble at the foot of the Premier League.
O'Neil was sacked after Saturday's defeat to Ipswich - Wolves' fourth in a row - left them second-bottom of the table with nine points from 16 games.
Pereira becomes the third Portuguese manager to take charge of Wolves following Nuno Espirito Santo and Bruno Lage as agent Jorge Mendes continues to have influence at Molineux.
