Wilder departed Oxford on 26 January to join Northampton, with Mickey Lewis placed in temporary charge.
Waddock, 52, has previously managed QPR, Aldershot and Wycombe, whom he led to promotion and subsequent relegation before being sacked in September 2012.
The former Republic of Ireland international leaves his role as head of coaching at MK Dons to join Oxford.
United beat fellow promotion-hopefuls Hartlepool on Friday night, to strengthen their grip on a League Two play-off place
“Gary came through clearly as he has all the qualities we have for the vision of Oxford United” said Oxford United chairman Ian Lenagan
"I'm looking forward to the challenge and there are some fantastic games coming up between now and the end of the season," Waddock told BBC Radio Oxford.
"It's a fantastic opportunity, this is an extremely big club and with the position they are in the league this is a wonderful opportunity for all of us going into the final end of the season.
"It's taken something special for me to leave MK Dons to join this wonderful football club and I'm really excited. There is quite a bit at stake so let's meet that challenge head on."
Waddock, who has been handed a two-year contract up until 2015/16, takes over an Oxford side who are in sixth place in League Two with eight games left.
Waddock confirmed Lewis and fellow coach Andy Melville will remain at the club having both steered the U's over the past two months while the search for Wilder's replacement was ongoing.