His appointment effectively kills off ambitious proposals by fellow Dutch architect MVRDV to build a 23m-high mountain over the gallery in Kensington Gardens, west London.
The radical scheme for a 200-tonne, grass-coated structure was due to go on site earlier this year but the project had to be sent back to the drawing board for 'further development'.
Now Serpentine chiefs have admitted that the MVRDV pavilion will almost certainly never be built because of 'outstanding technical and financial issues'.
Instead, the gallery has offered Pritzker prize-winning architect Koolhaas the chance to build his first-ever structure in the UK.
A director at the Rotterdam-based practice Office for Metropolitan Architecture (OMA), Koolhaas. has also been asked to come up with a programme of public events including debates, interviews and films for the pavilion, which is scheduled to open in July 2006.
Koolhaas is known around the world for both his writing and his buildings. Among the most critically acclaimed projects masterminded by him are the Casa da Musica in Porto, the IIT Campus Centre in Chicago, the Seattle Public Library and his famous Kunsthal in Rotterdam, completed in 1992.
The Dutchman will collaborate on the scheme with Cecil Balmond, the deputy chairman of Arup, who has worked on each of the gallery's five previous temporary pavilions.
The move will come as a major disappointment to MVRDV, who had expected to be asked to continue developing its scheme. Back in January, gallery director Julia Peyton-Jones vowed to support the practice's proposals and claimed she was committed to delivering the 'visionary' designs 'without compromise' (AJ 27.01.05).
However, Koolhaas' appointment will dash these hopes.
Every year the Serpentine Gallery asks an internationally renowned architect to draw up plans for a pavilion to sit on the gallery's lawn for three months.
At the time of the invitation the architect must not have completed a building in the UK. The other designers to have been given this opportunity include lvaro Siza and Eduardo Souto de Moura - who stepped into to replace MVRDV this year; Brazilian Oscar Niemeyer in 2003; Toyo Ito with Arup in 2002; Daniel Libeskind with Arup in 2001 and Zaha Hadid in 2000.