The Spaniard, 44, will lead Europe's defence in Illinois in September next year after he was announced as Colin Montgomerie's successor on Tuesday.
He has played in seven Ryder Cups, losing only 10 times in 31 matches, and has been vice-captain in the last two.
"The two Masters wins at Augusta National are the highlight of my playing career," said Olazabal. "But this is my proudest moment."
"Golf has been my life and representing Europe in the Ryder Cup has given me so much enjoyment," he added.
"So to be named the European Ryder Cup captain is something very special and I am looking forward to the next 20 months before we reach Medinah.
"Without question the Ryder Cup has given me many memorable times.
"We all know it is one of the most exciting and important competitions in the golfing calendar, and that it always inspires team members and spectators alike, but there is nothing like holding that trophy at the end of the week."
The appointment of the two-time Masters champion - the unanimous choice among Europe's leading players - was announced by George O'Grady, chief executive of the European Tour, in Abu Dhabi.
Britain's world number one Lee Westwood said: "He will bring leadership, experience and passion, and is going to be fantastic.
"Jose Maria has been a great Ryder Cup player and when he was involved with the vice-captaincy at Valhalla [in 2008] and at Celtic Manor [in 2010] he was superb.
"When Jose Maria conducts a team talk or motivational talk, everyone listens."
Corey Pavin's successor as American captain will be unveiled on Thursday.
It is firmly expected to be Davis Love, one of his backroom team in Wales when the United States lost 14.5-13.5 to Europe at Celtic Manor.
"My relationship with most of the American players is good," Olazabal told BBC Radio 5 live.
"My relationship with David Love is excellent, and we have the respect of each other. I'd be really happy to have him as an opponent.
"They [Colin Montgomerie and the players] did a wonderful job at Celtic Manor but I know we will have our hands full in Chicago. We know how loud and big the crowds can be there. It's going to be difficult but we know we have the talent to do it.
"You only have one shot and you have to give your best, your all. It's a huge challenge."
Olazabal made his Ryder Cup debut in 1987, and has earned a place in tournament history as part of the most successful partnership, with fellow Spaniard Seve Ballesteros.
He was assistant to Nick Faldo in 2008 and Montgomerie in 2010, when he was a contender to be outright captain, but hesitated over making himself available.
Following last year's win, Montgomerie ruled himself out of the running to be captain again at Medinah in Chicago in 2012, saying he wanted to play.
In recent years, Europe's captain for the biennial event has been selected by a formal vote of the 15-man Tournament Players Committee, but a phone poll by committee chairman Thomas Bjorn was enough to prove that Olazabal was the unanimous choice.
The only doubt over Olazabal's suitability was his long-running battle with rheumatic pain, which meant he only played in three competitive European Tour events in 2010.
But he is set to play in the Abu Dhabi Championship, which starts on Thursday, along with plenty more events in the lead-up to the Ryder Cup.
"There is a little concern, I cannot lie about it," he said.
"But I have felt much better in the last few months and it looks like everything is moving in the right direction. I'm going to try to play in four consecutive tournaments, I should be okay."
Yet Westwood believes it does not matter how often the captain-elect plays on the circuit in the build-up to the 2012 match.
"Everyone knows Ollie and no, I don't see it as a problem if he is not around and playing that much," he added.
"He should play enough events that will keep him abreast of what the likely team members are doing, so that shouldn't be a problem."
European Tour chief executive O'Grady said: "He is an honourable, incredible man - I haven't heard one person who wouldn't love to see him as captain."
Published: 18/02/2011
Source: http://news.bbc.co.uk/sport1/hi/golf/9364427.stm
