The Hawks announced Drew's hiring two days after The Associated Press and several other news organizations reported the team had selected Mike Woodson's top assistant as its new coach.
This is Drew's first head coaching job.
"After aggressively going through the interview process with all of the candidates it became clear, with his knowledge of the game as well as his experience as player and assistant coach, he had the qualities we were looking for to lead our club," general manager Rick Sund said in a statement. "Over the last few years, a number of teams have had success hiring from within and we feel he is more than ready for the challenge."
Woodson coached the Hawks for six seasons but was fired last month after a second-round sweep by the Orlando Magic. Drew emerged as the new coach from a search that also included former head coaches Dwane Casey and Avery Johnson.
The Hawks will formally introduce Drew at a news conference Monday. The selection of a familiar face will surely be popular with the players and may help to re-sign Johnson, who is set to join perhaps the best free-agent class in NBA history this summer.
The 52-year-old Drew is a former point guard who played in the NBA for 10 seasons. He was an assistant with the Los Angeles Lakers, Detroit, Washington and New Jersey before coming to Atlanta as Woodson's lead assistant in 2004.
"It has been a long journey to reach this level in my career and I'm very appreciative of the support I've been given by the ownership group and Rick," Drew said. "I'm excited about the opportunity to become a head coach in this league, and I will do my very best to continue to build on what we've accomplished here in Atlanta."
With Drew's hiring, the Hawks can turn their attention to their main offseason priority. Johnson, a four-time All-Star, is planning to join a free-agent class that likely will be led by LeBron James, Dwyane Wade and Chris Bosh.
The Hawks have indicated a desire to re-sign Johnson but haven't said whether they'll be willing to dole out the maximum contract it could take to keep him with the team. His season ended with a disappointing playoff performance that included a run-in with the home fans during the series against Orlando, which beat the Hawks by an average of 25.3 points in the most lopsided four-game sweep in NBA history.
The poor showing — the second straight sweep of Atlanta in the second round of the playoffs — led the team to dump Woodson even though the Hawks had snapped a nearly decade-long playoff drought in 2008 and improved their record for five straight seasons.
Drew averaged 11.4 points and 5.2 assists in 714 career games for four NBA teams. He was a first-round pick in 1980 by Detroit, where he played one season. He spent the next five years with the Kings, both in Kansas City and Sacramento, and split his last four seasons between the two Los Angeles teams, the Clippers and the Lakers.
Drew's son, Larry II, just finished his sophomore season at North Carolina.