Wilson has an outstanding track record and reputation in Welsh rugby, after previous successful coaching spells at the Scarlets and Newport Gwent Dragons.
The Weston-Super-Mare born coach also has extensive international experience and led Wales Under-20s when they finished third in the IRB Junior World Championships in 2012 and runners-up in 2013.
Wilson moved to Bristol Rugby in 2014 and helped guide the club to top spot in the Greene King IPA Rugby Championship, with an unbeaten home record at Ashton Gate, during the regular season.
Following amicable discussions with Bristol's director of rugby Andy Robinson, Wilson has been released early from his contract.
He will now head up the coaching team at Cardiff Blues, with the full make-up of the backroom staff at BT Sport Cardiff Arms Park to be confirmed in the coming weeks.
Danny Wilson said: "I am both proud and excited to be named Head Coach at Cardiff Blues.
"I'd like to firstly thank Andy Robinson and Bristol Rugby for their understanding and support with allowing me to take up this opportunity. I wish them every success in the forthcoming season and the future.
"I'm now looking forward to getting started at BT Sport Cardiff Arms Park, a place steeped in history and tradition, and building an environment, culture and squad that will take us forward in the long-term.
"Cardiff Blues has always enjoyed fantastic support from its dedicated fans and I would encourage them to now get right behind us and be part of the journey over the coming years."
Chief Executive Richard Holland said: "We are thrilled that Danny has agreed to join us as Head Coach and lead Cardiff Blues over the next three years.
"Danny has an outstanding track record in coaching, a fantastic reputation across the game and has all the qualities and ambition needed to drive our region forward in the long-term.
"He understands the culture of Welsh rugby and has significant experience, in both the international and regional game. We're excited to see the legacy Danny builds here at BT Sport Cardiff Arms Park.
"Danny will have complete authority on the rugby side of the business and will be given the time to rebuild and get Cardiff Blues back to where we feel is our rightful place in European rugby.
"He will now surround himself with his coaching team to take us forward over the next three years and he will therefore confirm our backroom staff in the coming weeks.
"Finally, I would like to take this opportunity to thank Bristol Rugby and CEO Steve Gorvett for their collaboration and understanding throughout this process. Our thanks also go to Wales Head Coach Warren Gatland for his involvement and all the candidates we interviewed."
Bristol Director of Rugby Andy Robinson said: "We thank Danny for his efforts and commitment to Bristol Rugby over the past season.
"Danny has worked hard with our pack of forwards and the improvements we have made in that area is clear. We wish him the best of luck in his future career."
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