Gilbert agreed to the deal Friday night after meeting with Texas coach Charlie Strong, athletic director Mike Perrin and school president Greg Fenves. Perrin and Fenves flew to Tulsa, Oklahoma, with Strong to complete the deal after talks broke down and Gilbert rejected the initial offer.
Video footage showed Gilbert meeting the Longhorns' entourage outside a Tulsa home. The former Texas high school quarterback will also be the quarterbacks coach for the Longhorns.
"I've been looking forward to an opportunity like this for a long time, and we're finally here," Gilbert said in a statement.
Gilbert will receive a three-year contract worth $850,000 annually.
At Tulsa, Gilbert shared offensive coordinator duties with Matt Mattox and coached quarterbacks and receivers under first-year coach Philip Montgomery. Mattox, Tulsa's offensive line coach, will join Gilbert in Austin as the offensive line coach and running game coordinator on a three-year deal worth $550,000 per year.
"We just made two great hires for our staff," Strong said in a statement. "They're outstanding coaches who will do a great job of not only developing our players, but also representing this university and doing things the right way."
Both contracts are pending approval by the Texas board of regents.
Tulsa (6-6) faces Virginia Tech (6-6) in the Camping World Independence Bowl on Dec. 26. The Golden Hurricane promoted Mike Bloesch to replace Mattox as offensive line coach. He was Tulsa's offensive quality control coach and assistant offensive line coach.
Longhorns 2017 quarterback commit Sam Ehlinger expressed his enthusiasm over Gilbert's hiring in a tweet Friday night:
Strong initially interviewed TCU co-offensive coordinator Sonny Cumbie, who turned down an offer from Texas to stay with the Horned Frogs. California offensive coordinator Tony Franklin reportedly had been in the mix as a candidate as well.
Earlier Friday, after reports surfaced that Gilbert turned down Texas' offer, Fenves tweeted his full support for Strong, adding, "I am committed to helping him move Longhorn Football forward."
A university spokesman said Fenves felt compelled to respond after reports and fan reaction on websites started blaming school administrators for Strong's difficulty revamping his staff.
Perrin, who was initially brought on as interim athletic director in September and given the permanent job earlier this month, also has stated full support for Strong.
Strong will get "whatever he needs to bring in the right coaching staff," university spokesman Gary Susswein said without elaborating.
Next season, Strong will be in the third year of a five-year contract that pays more than $5 million per year. He has been interviewing candidates for the offensive coordinator opening, seeking to rejuvenate one of the worst offenses in the Big 12. He stripped offensive coordinators Shawn Watson and Joe Wickline of their play-calling duties after one game this season. Receivers coach Jay Norvell called plays for the final 11 games of Texas' 5-7 season.
Texas announced Saturday that the contracts of Watson and Wickline would not be renewed.
"I'm grateful for all they've done, but feel like with our new vision for our offense, we're at a point where we need to look in a different direction in their positions," Strong said.
Wickline, who remains mired in a legal battle with previous employer Oklahoma State over a nearly $600,000 buyout, coached the Longhorns' offensive line for two seasons.
Since playing for the national title after the 2009 season, Texas is 41-35. Strong is 11-14 in two seasons.
ESPN.com's Max Olson and The Associated Press contributed to this report.