The 48-year-old Argentine will succeed German Thomas Tuchel, who was sacked last week. Pochettino, who played for PSG between 2001 and 2003, has been out of work since being sacked by Spurs in November 2019.
PSG are third in Ligue 1 and will face Barcelona in the last 16 of the Champions League in February and March.
Welcome Mauricio Pochettino 👋pic.twitter.com/Fr4ZgKxhNI
— Paris Saint-Germain (@PSG_English) January 2, 2021
He also had spells with Espanyol and Bordeaux after starting his career in his home country with Newell’s Old Boys.
“I am really happy and honored to become the new coach of Paris Saint-Germain," Pochettino told the Parisian club’s official website.
“I would like to thank the club's management for the trust they have placed in me. As you know, this club has always held a special place in my heart.
“I have wonderful memories, especially of the unique atmosphere of the Parc des Princes. I return to the club today with a lot of ambition and humility, and am eager to work with some of the world’s most talented players.
“This team has fantastic potential and my staff and I will do everything we can to get the best for Paris Saint-Germain in all competitions.
“We will also do our utmost to give our team the combative and attacking playing identity that Parisian fans have always loved.”
PSG chairman Nasser Al-Khelaïfi added: “I am proud to see our former captain returning to Paris Saint-Germain, as the club has always remained his home.
“The return of Mauricio fits perfectly with our ambitions and it will be another exciting chapter for the club and one I am positive the fans will enjoy.
“With the appointment of Mauricio Pochettino, Paris Saint-Germain is committed to continue to build and move the club forward over the coming years.”