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It follows the sacking of Henrik Pedersen by the League One club.
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Challinor will be at Hillsborough on Sunday for their league game with Blackpool.
In a statement, the club said: "Sheffield Wednesday Football Club can confirm that an agreement was reached last night for Dave Challinor to become the club's new First-Team Manager.
"The 51-year-old will be in attendance at today's fixture against Blackpool at Hillsborough.
"The club looks forward to formally introducing Dave to supporters on Monday, when further details of the appointment will be announced."
Former Crystal Palace, QPR and Stoke defender Clint Hill is expected to join Challinor at Wednesday.
The Sheffield Star reports Hill was one of the first people the club spoke to as talks accelerated.
The 48-year-old was part of Challinor's backroom team at Stockport from 2021 until this summer.
The 51-year-old left Stockport at the end of last season after losing in the League One play-off final to Bolton.
He had got them promoted from the National League and League Two previously.
Challinor has also had successful spells at AFC Fylde and Hartlepool.
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The Owls currently sit ninth in League One following their relegation from the Championship.
The club ended last season bottom of the second tier on zero points after being deducted 18 points over the course of the campaign.
Wednesday can climb up to near the play-off places with a win over Blackpool on Sunday.
Should they win their two games in hand, the club will be pushing for automatic promotion.
Following their clash with Blackpool, they travel to Oldham in the first round of the FA Cup next Sunday.