Pancalli, who is president of Italy's Paralympics committee, will replace emergency commissioner Guido Rossi who resigned earlier this week after becoming president of Telecom Italia, according to the Federation's official website.
Rossi was brought in to clean up Italian football following last season's match-fixing scandal after Franco Carraro resigned.
Pancalli was unanimously elected by the CONI council that named Italian legend Gigi Riva as vice-commissioner responsible for the various national teams.
"As a sportsman I am honored at the trust that the council has given me, nominating me to guide the Football Federation which represents a very important part of Italy's sport," said Pancalli.
"I will face this adventure with dedication and commitment. I am used to facing challenges, and my main objective is to bring back the serenity we lost during the summer," he added.
The appointment illustrates that for the time being at least, the Olympic committee has direct control over the federation.
Pancalli's mandate is set to run until 28 February, and it is expected at that time the federation will elect new officials.