Altman, 51, spent 16 seasons at Creighton, finishing with a 327-176 record. He led the Bluejays to 11 consecutive 20-win seasons before they went 18-16 this past season.
Creighton went to the postseason 13 times in his tenure, including seven NCAA tournament appearances.
Altman replaces Ernie Kent, who was dismissed after 13 seasons at his alma mater. The Ducks went 16-16 last season.
"I think this place can be special. Is there a lot of work to be done? Absolutely. Is there a culture to be changed? Possibly," Altman said. "As I spend more time with the players we'll make adjustments and we'll move on and we'll get some new players. But we can build something special here. Everything is in place."
Altman's appointment was announced Monday at a news conference at Oregon's new Matthew Knight Arena, which is currently under construction and will replace venerable MacArthur Court.
The hiring ends more than a monthlong search during which several high profile names -- including Michigan State's Tom Izzo and Minnesota's Tubby Smith -- where rumored to be on Oregon's wish list. Missouri coach Mike Anderson said the Ducks approached him, but he turned down the job.
Altman joked about the process.
"You look at my wife, you look at me, I wasn't her first choice either," he said.
Former Oregon athletic director Pat Kilkenny, who conducted the search, disputed talk that the job was hard to fill.
"We had literally five national championship coaches showed an interest in our job and three of them would have taken it. The perception that people didn't want the job couldn't have been further from the truth," he said. "It was all about getting this right. We could not afford to make a mistake here."
In April 2007, Altman left Creighton to take the Arkansas job but returned to Omaha within 24 hours after having a change of heart.
"This is home. This is where I will finish my coaching career. That's pretty obvious now," Altman said at a news conference after Creighton athletic director Bruce Rasmussen hired him back.
On Monday he said: "If it wasn't hard to leave, I wasn't doing my job for the past 16 years."
Before his flirtation with Arkansas, Altman had strung together nine straight 20-win seasons and taken the Bluejays to the NCAA tournament seven of his 13 years at the school.
His next two teams were 22-11 and 27-8 and went to the NIT. Last season's squad was 18-16 and was relegated to the CollegeInsider.com tournament.
Altman will be succeeded at Creighton by Iowa State's Greg McDermott.
Kilkenny said he heard nothing but praise for Altman.
"If I spoke to 20 coaches about his basketball abilities, his leadership, his coaching abilities, I got 20 A-pluses," he said.
"It's a fresh start. I'm even going to change my number to get a whole new fresh start, something that I'm really looking forward too," Williams said.
Altman joins a Ducks program that is currently without an athletic director.
Former football coach Mike Bellotti left the AD's office last month to become a college football analyst with ESPN. His departure became controversial after it was made public that he never signed a written contract and was leaving the Ducks with a $2.3 million "golden parachute."
Altman said he did have concerns about Oregon's AD vacancy.
"I trust the administration to put someone in place that will run our athletic program on a national scale, he said, "and a businessman that will take care of fundraising and dollars and cents and who will also have the student-athletes' interest at heart."