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The club announced their decision this morning after a lengthy interview process that included meetings with a least five other candidates and the former Sheffield United and Barnsley manager - who has not held a coaching position in five years - was given the nod after the club's preferred choice refused to commit to the club in the long term.
Spackman, 45, will take over with immediate effect.
"We are delighted that Nigel has agreed to join us as manager," said chairman Stewart Till. "It has been an intensive process in which we have interviewed a number of excellent candidates.
"In doing so, we drew up a set of criteria which we believe a Millwall manager needs to meet, and Nigel Spackman impressed us greatly in terms of his experience in the Premiership, the Championship and coaching young England teams.
"He clearly possesses the requisite vision, commitment, footballing intelligence and has a plan to restore Millwall to our rightful position as, at the least, one of the leading Championship clubs."