The hosts have been on the lookout for a new head coach following the sacking of Mano Menezes last week.
And Scolari, who coached Brazil at the turn of the century and won the 2002 World Cup, has now been tasked to follow suit with a squad brimming with talent, but woefully short on confidence.
“We have an obligation to win the World Cup,” the former Chelsea boss says. “We are not the favourites to win it now, but we aim to become favourites as we are starting to see the results of our hard work.
“If a national team that have won five World Cups is organising the World Cup, you cannot think about just making it to the final or semi-finals.”
Scolari will be joined in the Brazil set-up by former South Africa national team coach Carlos Alberto Parreira, who has been appointed team director.