Fangio has agreed to a three-year contract, a source told Adam Schefter of ESPN.
The move rounds out new head coach Matt Nagy's staff. He's also brought on former Oregon head coach Mark Helfrich as offensive coordinator and Chris Tabor as special teams coach.
Fangio interviewed for the Bears' head coaching vacancy and became a free agent Tuesday, so it was possible he'd seek a new start elsewhere.
By retaining him, Chicago ensures continuity on one side of the ball. The coordinator guided the Bears to 10th in total defense in 2017 despite a host of injuries to key contributors.