The 61-year-old Camacho signed a two-year contract in Libreville, the Gabon Football federation said in a statement, and replaces former Portuguese international Jorge Costa, who was sacked last month.
Gabon play Guinea Bissau in the opening match of the Nations Cup on Jan. 14, leaving Camacho with little time to work with the team.
They are also in contention for a place at the 2018 World Cup finals in Russia, qualifiers for which resume in August.
Camacho has not worked since he was fired as the coach of the Chinese national team in 2013.
He won 81 caps for Spain and played more than 400 games for Real Madrid in a glittering playing career before coaching at several top Spanish clubs, including Sevilla, Espanyol and Real.
Camacho also had two stints as coach of Benfica in Portugal.
(Reporting by Mark Gleeson in Cape Town; Editing by Sudipto Ganguly; mark.gleeson@thomsonreuters.com; +27828257807; Reuters Messaging: Reuters Messaging: mark.gleeson.thomsonreuters.com@reuters.net)
