"Francisco Arce, new coach of the Paraguayan national football team, welcome Chiqui," the team announced on its official Twitter account.
Arce replaces Argentine Ramon Diaz, who resigned after Paraguay’s group stage elimination at the Copa America Centenario in the United States in June.
The former Paraguay right back, who played at the 1998 and 2002 World Cups, will be looking to see the team through to the 2018 finals in Russia.
Paraguay, who reached four successive World Cups between 1998 and 2010 where they progressed to the quarter-finals for the first time, are a lowly seventh in the South American qualifying group after six matches.
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
They picked up nine points under Diaz and are four points behind leading pair Uruguay and Ecuador before their next matches at home to Chile and away to Uruguay in the first week of September.
The top four teams after 18 matches qualify for the finals while the fifth goes into an intercontinental playoff for one more berth.
"I accept that our first time was not good," Arce told a local radio station about his first spell in charge. "We have acquired more solidity in the five years that have passed."
Arce, who had barely hung up his boots when he took the job in 2011, has since being sacked a year later won the Paraguayan league title with Cerro Porteno in 2013 and Olimpia in 2015.
As a player Arce, nicknamed "Chiqui" (little one) for his slight build, won the South American Copa Libertadores with Brazilian sides Gremio in 1995 and Palmeiras in 1999 having won three Paraguayan league crowns with his first club Cerro Porteno.
(Writing by Rex Gowar; editing by Amlan Chakraborty)
