The 70-year-old former England manager has replaced Frank de Boer after the Dutchman was sacked following just four league games in charge of the south London club.
“Former England manager Roy Hodgson has been appointed as the new manager of Crystal Palace FC, on a two-year contract,” said a club statement.
For Hodgson, born in the south London suburb of Croydon, managing Palace means the Englishman is now in charge of his boyhood side after a managerial career spanning five decades and 15 clubs in eight countries, as well as spells in charge of four national teams.
“This is very much the club of my boyhood and I remember in my youth watching the club from the terraces at the Holmesdale Rd end which gave me such fond memories,” he told Palace’s website.
“It is very rewarding to find myself here now, in different times, as the Palace manager at a club that I have always loved and admired with a huge potential.”
Dutchman De Boer was sacked after last Sunday’s (Sept 10) 1-0 loss away to Burnley meant Palace were the first team in England’s top flight to lose their opening four games without scoring a goal since Preston North End 93 years ago.
But Hodgson, the oldest manager appointed to a Premier League position, insisted the Eagles could bounce back from their woeful start to the season and remain in the Premier League.
“I don’t honestly believe that there is necessarily a lot that needs to be done,” he told Palace TV.
“You can always get off to a bad start, (but) what we’ve got to remember is our fate will be decided after 38 games, not four.
“We’ve got to work hard to get back on track but I know that my attitude is shared by the players and it is my job to let them know what I want from them.”
Ray Lewington, Hodgson’s deputy with England, will also be his assistant at Selhurst Park having had two spells as the club’s caretaker manager.
Hodgson’s managerial honours include seven Swedish league titles, two Swedish Cup wins, one Swiss title and one Danish title, while he has also been in charge of four Premier League clubs – Blackburn Rovers, Fulham, Liverpool and West Bromwich Albion.
But his time in charge of England ended with a shock defeat by outsiders Iceland that saw the team knocked out of Euro 2016.
This is his first coaching post since that humiliating loss but, speaking to Sky Sports earlier on Tuesday, Hodgson said there were no scars from his time with England.
“I didn’t want to end it (my career) on a bad result but I think the 56 (England) games and the seven defeats is not so bad,” he explained.
“I think we changed the (England) team around and the young, exciting team you see today is the team I was putting together.
“We lost a knockout game and I was very sad about that. I can’t put that right but I’m very pleased to be back at the highest level with a good football club.”
De Boer, 47, whose four games in charge are the fewest ever for a Premier League manager, said in a brief post on his Instagram account that he regretted the decision.
“Very disappointed about the decision but never the less I want to thank the players, staff and the fans for their support. Good luck for the future,” he said.
Hodgson lead training yesterday (Sept 13) and will be in charge for Palace’s league match against Southampton at Selhurst Park on Saturday (Sept 16).