Board chairman Nasim Ashraf told a news conference that Lawson had been preferred over two other short-listed candidates, Dav Whatmore and Richard Done.
"Lawson is our choice and we are confident he will help the Pakistan team into a new era of success," Ashraf said.
Earlier, Lawson told Australian media that the PCB had contacted him on Sunday and confirmed he would be appointed as full-time successor to Bob Woolmer, who died of suspected heart failure during the World Cup in March.
Ashraf said Lawson had been selected after giving an impressive interview and presentation to the board.
"The players were also comfortable and impressed with his working style," Ashraf said.
"Plus since our strength is our bowling we have gone for a bowler coach. He has been given a two-year contract that can be renewed," he said.
Ashraf said 13 people had initially applied for the job.
"We wanted a bright, young, qualified coach well aware of the modern-day requirements. And Lawson hopefully will take the team into a new era," said Ashraf.
FRESH APPROACH
Pakistan, who were eliminated in the first round of the World Cup after being upset by minnows Ireland, have had 11 coaches since 1997.
Lawson told the Geo television channel he was excited and nervous but was looking forward to coaching Pakistan.
"Hopefully I will bring a fresh approach to the coaching of the team. I have analysed a lot of international cricket and hopefully I will bring in some fresh ideas," he said.
His first priority was to get the support staff in place.
"Lots of planning has to be done on how we want to approach the Twenty20 World Cup which is six weeks away," he added.
Lawson, who took 180 wickets in 46 Tests for Australia between 1980 and 1989, has never coached before at international level.
A trained optometrist, he had been working with state side New South Wales and has developed a media commentary career since his retirement from the game.
Ashraf said the support staff would be appointed in consultation with the new coach who would reach Pakistan on Aug. 15.
"But we definitely are looking at having specialised batting and fielding coaches as part of the support staff," he added.
