Dowie have also been in charge at Crystal Palace and Oldham. He left Charlton in November after being in charge for just 12 league games.
Coventry managing director Paul Fletcher said: “When we decided to appoint a new manager, we set a number of criteria.
“Iain was incredibly impressive on the occasions we met and there is no doubt that he was by far the strongest candidate in all the criteria we set.
“This is undoubtedly an exciting time for everyone involved with the Sky Blues and we feel we have the best available person to help take Coventry forward.”
