Rafa Benitez has been appointed Real Madrid coach for the next three seasons, according to the club's website.
Spaniard Benitez, 55, quit Napoli last week and takes over from Italian Carlo Ancelotti, who was sacked after a campaign where Real Madrid failed to win any major silverware.
The club got knocked out of the Champions League - an event they won last season for the 10th time - in the semi-finals by Juventus and finished second behind Barcelona in La Liga.
Champions League: 1
La Liga: 2
Europa League: 1
UEFA Cup: 1
FA Cup: 1
"It's an emotional day returning here to my home," Benitez told reporters at the Santiago Bernabeu stadium in Madrid.
"I have a good technical team behind me and I hope things go well, that we win titles and the team plays well."
A former Valencia, Liverpool, Inter Milan and Chelsea manager, Benitez began his coaching career at Real's youth academy in 1986.
He made his name with Valencia whom he led to two La Liga titles before leaving for Liverpool in 2004, where he won the FA Cup and the Champions League.
Benitez has failed to land a league title in the 11 years since he swapped Valencia for Liverpool.
He delivered only the UEFA Super Cup and the FA Cup in 2006 in the five years that followed at Anfield.
Benitez then had a nightmare experience following in the footsteps of Jose Mourinho at Inter Milan where he lasted just six months.
This was followed by another short-lived unhappy spell at Chelsea followed as he was never accepted by the fans despite winning the Europa League in 2013.
A two-year spell with Italian giants Napoli also came to an unsatisfactory end on Sunday with a 4-2 home defeat to Lazio which ensured they did not qualify for next season's Champions League.
"Real Madrid will present Rafa Benitez as the new coach for the next three seasons," the club statement read.
"A methodical tactician, tireless worker and footballing scholar, Benitez is one of the greatest coaches on the global stage.
"With his status among the elite managers cemented, Benitez now makes his return to Real Madrid with the objective of adding more silverware to the world's most lauded club."
Source: Al Jazeera and agencies