Bailey, a former senior member of staff at Elle, joins from her most recent role as launch editor of Emap's teenage fashion bible Elle Girl.
Bailey, who takes up the post immediately, was originally hired to work as a staffer on the title four years ago by former Elle editor Fiona McIntosh.
Bailey is credited with being an integral part of the team that made the title the success it is today, as the UK's second-biggest fashion magazine after Conde Nast's Vogue.
Bailey's last position on Elle was as editor-at-large, where she was responsible for the title's celebrity content, which has helped boost its circulation over the last four years.
Bailey has been with Emap for seven years and has amassed a wealth of experience as editor of other titles such as J-17 and the now-defunct Minx.
She beat off competition from other internal hopefuls including Margi Conklin, deputy editor of Elle, and Rachel Loos, editor of Elle Decoration.
Juliet Warkentin, a former editor of Marie Claire and fashion industry bible Drapers Record, also owned by Emap, and Lorraine Candy, editor of Cosmopolitan, are also thought to have been sounded out about the job.
Barry McIlheney, chief executive of Emap Elan, said: "Sarah's vision for Elle is truly inspiring and her passion for the Elle brand is second to none. Sarah is hugely popular with the team and very well known on the fashion and international celebrity scene. She is a proven editor and has shown her talent as editor on Elle Girl. She also has the advantage of being an Elle girl from her head to her Manolos."
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