Kenny MacAskill insisted that G4S has a "proven track record" in providing electronic monitoring of offenders after they are released from prison or given community service.
But the announcement came on the day an inquiry by the Commons home affairs committee recommended the firm be the first name on a new register of "high-risk providers who have a track record of failure".
Opposition parties said it was "astonishing" G4S has won the contract, which will see the company responsible for tracking around 700 criminals who are monitored in the community at any time.
Questions over the deal deepened after it emerged that the SNP last month backed a moratorium on contracts to the company until an internal review of the London 2012 security shambles was published. This is unlikely to happen until next week.
G4S only told organisers two weeks before the start of the games that problems with its scheduling system meant it could not guarantee enough security staff. At the last minute 4,700 troops and police had to be drafted in.
However, Nick Buckles, the chief executive, has continued to insist that the firm be paid a £57 million management fee included in its original contract.
Lewis Macdonald, Scottish Labour justice spokesman, said: "Despite the international embarrassment of failing to deliver Olympic security and refusing to hand over the money paid to them by taxpayers, the Scottish Government has handed them even more of our hard-earned cash.
"It is shocking that Strathclyde Police had to incur the costs of security at Hampden for Olympic football because of G4S failures."
David McLetchie, his Tory counterpart, welcomed the introduction of satellite tracking but described the G4S decision as "astonishing".
Willie Rennie, the Scottish Liberal Democrat leader, said: "The SNP must explain why they continue to award contracts to companies they have previously slammed."
The Scottish Government justified the five-year contract, starting next April, by arguing the firm is the largest provider of electronic monitoring in the world and its clients include the English justice system.
The branch of the firm that has won the contract is "entirely separate" from that which was responsible for the Olympics debacle, officials argued.
Mr MacAskill said he will monitor the roll-out of satellite tracking closely, adding: "It gives our law enforcement agencies greater tools in their armoury and as the world's leading provider of this technology, G4S have a proven track record in this area."
Hundreds of criminals released on parole or given community service are currently forced to wear electronic tags that emit a radio frequency.
These inform the authorities if the offender breaks the terms of his release by, for example, leaving his home at night.
But satellite tracking uses Global Position Systems (GPS) to continuously monitor their whereabouts and even allows the authorities to establish 'exclusion zones' that trigger an alarm if criminals enter them.
The new system will be introduced next year for low-level criminals and, if successful, will be extended to sex offenders and wife beaters.
The technology would allow the victims of domestic violence to receive an alert when their abuser is nearby. Similarly, exclusion zones could be set up around schools for sex offenders.