Former Chelsea and Leicester City boss Ranieri replaced the sacked Slavisa Jokanovic on after signing a "multi-year" contract, with Fulham stuck at the bottom of the table on five points.
Fulham was among the Premier League's highest spenders in the last transfer window, splashing out approximately £100million to bolster its squad after promotion from the Championship.
Jean Seri, previously linked with Barcelona, was among the eye-catching arrivals, while World Cup winner Andre Schurrle also signed, as well as Aleksandar Mitrovic and Alfie Mawson.
But Jokanovic was unable to muster a winning formula this term, losing his last six league games in charge and leading Fulham to only one victory in the Premier League.
Ranieri, a Premier League winner with Leicester in the 2015-2016 season, feels the talent at Fulham means they should be looking up the league table.
"It is an honour to accept Mr Khan's invitation and opportunity to lead Fulham, a fantastic club with tradition and history," Ranieri told the club's website.
"The objective at Fulham should never be to merely survive in the Premier League. We must at all times be a difficult opponent and should expect to succeed.
"This Fulham squad has exceptional talent that is contrary to its position in the table. I know this team is very capable of better performances, which we will work on straight away as we prepare for Southampton at the Cottage."
Ranieri's first game in charge will be against Southampton on 24 November, while his former club Leicester visits Craven Cottage early next month.