The former Swansea boss will now take on the task of adopting Nigel Pearson's team and heading their charge for promotion after the Foxes came agonisingly close to reaching the Premier League last season, only to fall in the Play-Offs.
Going into the new Championship season with high hopes, Milan Mandaric has suggested that Sousa will have money to spend on transfers.
The City chairman said: 'He will get whatever he needs, but we have the squad here.
'We will not bring in massive numbers and I will not be selling any of our best players.' He added.
Sousa brings a host of experience to the club, having enjoyed a highly decorated playing career - winning the European Cup on two occassions whilst also winning silverware in the German, Portuguese and Italian leagues.