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The Jagaurs have officially confirmed the move.
Mularkey, 50, was previously head coach with the Buffalo Bills, and went 9-7 in 2004 and 5-11 in 2005. He interviewed for the job Tuesday.
General manager Gene Smith led the Jags' search for a new coach after outgoing owner Wayne Weaver fired coach Jack Del Rio on the same late November day that he announced he was selling the team.
Interim coach Mel Tucker took over and made significant changes, cutting starting receiver Jason Hill, firing receivers coach Johnny Cox and reassigning quarterbacks coach Mike Sheppard.
The Jaguars (5-11) went 2-3 under Tucker, apparently not enough for him to get the full-time job.
Atlanta, where Mularkey served as offensive coordinator, was eliminated from the playoffs on Sunday in a 24-2 loss to the New York Giants.
That the Falcons were limited to just two points in Mularkey's last game might raise eyebrows in Jacksonville.
As CBSSports.com's Pete Prisco suggested on Twitter: "Mularkey may prove us all to be idiots, but I think it's a strange hire. It sure isn't 'wow' stuff in a good way for the franchise.
But Jaguars.com staffer John Oehser took a broader view.
"Been saying since Day One hire wouldn't be made on one game," Oehser tweeted. "Mularkey had four solid seasons in Atlanta and solid reputation in NFL circles."
New owner Shahid Khan reportedly sat in on interviews.
Khan said in his introductory news conference last month that he believed the NFL was a passing league, which indicated offense would be a priority as the Jaguars.
In addition to Mularkey and Tucker, the Jaguars interviewed Jets offensive coordinator Brian Schottenheimer and Carolina offensive coordinator Rob Chudzinski. Bengals offensive coordinator Jay Gruden was said to be a favorite at one point, but he isn't interested in interviewing for heading coaching jobs this offseason.
According to Ganguli, Mularkey's development of Falcons quarterback Matt Ryan, who developed quickly, was part of the draw for the Jaguars. Ryan was drafted out of Boston College in 2008 and threw for 3,440 yards in his rookie year and had an 87.7 rating. He threw 16 touchdowns and 11 interceptions that season.
In the 2011 season, Ryan threw for 4,177 yards with 29 touchdowns and 12 interceptions. He had a rating of 92.2.
The development of Jaguars quarterback Blaine Gabbert will be a prime task for the next Jaguars head coach.
Mulkarkey, a Miami native, is familiar with the area, having played for the University of Florida. He played tight end in the NFL for nine seasons (1983-91), six with the Minnesota Vikings and three with the Pittsburgh Steelers.
He's been the Falcons' offensive coordinator since a two-year stint as an assistant coach under Nick Saban with the Miami Dolphins. He was scheduled to interview for their head coach opening this week. He was offensive coordinator under Nick Saban in 2006.
Mularkey began his pro coaching career as a tight ends coach for Tampa Bay and Pittsburgh, then became the Pittsburgh Steelers offensive coordinator from 2001-03, before becoming Bills coach. ...
For what it's worth. ... NFL Network insider Jason La Canfora reports the Jaguars would like to keep Tucker on board as defensive coordinator, but Tucker is interviewing with Minnesota for that same position.