The 59-year-old, who played 42 times for West Germany and coached Switzerland and Ivory Coast, would arrive on Monday in time to attend Korea's friendly with Uruguay, the KFA added.
The news comes just ahead of the Korean traditional Thanksgiving holiday and will be well received by football fans in the country, who were concerned that the search for a successor to Hong Myung-bo was dragging on.
Hong resigned in July following South Korea's first-round exit at the World Cup in Brazil, and the KFA's first choice to replace him, Dutchman Bert van Marwijk, turned the job down last month due to contractual issues.
After Van Marwijk's rejection the KFA widened their search and said they would negotiate with several coaches instead of just one candidate.
Lee Yong-soo, head of the KFA's technical committee, had recently expressed concern that the top candidates for the job were too expensive or did not have a good impression of what  coaching Korea would entail.
The Koreans host Venezuela later on Friday with former international Shin Tae-yong and two other local coaches taking charge. They will travel to Tehran to play Iran in November as part of their buildup to the Asian Cup in Australia in January.
Among the club sides he has coached, Stielike worked with South Korean defender Kim Ki-hee at Qatar's Al-Sailiya.
"I remember that he was a good tactician who knew how to utilise his assets and respond to opposition's strategies," Yonhap News agency quoted Kim as saying.
"I think he will be great at molding different players into a team and making the most out of their talent," he said.

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