The club made the announcement on Friday evening
Sam Allardyce has made a quick return to football management this week after Crystal Palace unveiled the former England manager as their new manager on Friday afternoon.
The 62-year-old has been out of work since leaving his post as England boss after just 67 days in the role.
Allardyce replaces Alan Pardew who was sacked on Thursday afternoon after a run of one win in 11 games. Crystal Palace have struggled in 2016, losing 22 of their 36 league games in the calendar year.
"We are delighted to be able to make an appointment so quickly and fortunate that someone of Sam’s calibre and experience was available," said chairman Steve Parish.
He signs a two-and-a-half year contract which will see him stay with the club until 2019 and will reportedly pocket about £2.5m per year.
Allardyce was in charge of Sunderland last season and helped them avoid the drop with just a handful of games left.
He left his position with the English FA in September after only one match in charge, having been filmed discussing FA rules on third-party ownership by undercover reporters. His only game in charge came in a 1-0 victory against Slovakia, with Adam Lallana scoring the only goal of the game.