Desperate to turn around a franchise that won just seven games last season, Bobcats owner Michael Jordan rolled the dice selecting Dunlap, who has no NBA head coaching experience and spent the last two season as an assistant at St. John's University.
Dunlap takes over from Paul Silas, who was not offered a new contract after last season's dismal 7-59 effort.
"Mike Dunlap embodies the characteristics we were seeking in a head coach," said Rod Higgins, Bobcats president of basketball operations in a statement. "He is renowned in basketball circles as a teacher, developer of talent, communicator and collaborator.
"His energy and work ethic are endless, and we are excited to have him in charge of our team."
The well-traveled Dunlap brings 32 years coaching experience to the job but most of them in college, 14 as a head coach.
He also spent three seasons as head coach of the Adelaide 36ers in Australia's National Basketball League and was an assistant with the Denver Nuggets from 2006-2008.