The 61-year-old, appointed until after Euro 2024, has coached Spain's youth teams since 2013, most recently the U23 side.
De la Fuente replaces Luis Enrique after the former Barcelona coach was sacked following Spain's shock World Cup last 16 defeat by Morocco.
"I was a professional player for 15 years," De la Fuente told a press conference.
"I won titles, I was an international (at youth level) apart from with the national team.
"I have (coached) 16 players who were in the Spain squad at the World Cup.
"If there is anyone in Spain who knows the present and the future of Spanish football, it's me."
De la Fuente was a left-back for Athletic Bilbao in the 1980s and 90s, winning two La Liga titles and the Copa del Rey with the Basque team.
He also played for Sevilla and Alaves before starting his coaching career.
The new Spain coach earned silver with the national side at the 2020 Olympics, losing in extra time to Brazil in the gold medal match.
De la Fuente was asked if he would recall Sergio Ramos and, while he did not want to speak about individual players, left the door open for the veteran Paris Saint-Germain defender to earn a recall.
Ramos is Spain's most capped player with 180 caps between 2005 and 2021.
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