"Valencia Football Club has reached an agreement with England coach Gary Neville to be the coach of the first team until June 30, 2016," the club said.
Nuno Espirito Santo stepped down 'by mutual consent' after Sunday's 1-0 La Liga defeat at Sevilla left the ambitious Singapore-owned club languishing in mid-table.
Neville has worked as a media pundit and been a member of England manager Roy Hodgson's coaching staff since retiring as a player in 2011.
He will take over the running of the Valencia first team next Sunday ahead of their Champions League game against Olympique Lyon a week today.
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"We are delighted to have been able to bring in Gary so quickly," said Valencia president Lay Hoon Chan on the club website.
"He is somebody who has technical experience as part of the England national team and a brilliant career as a player for Manchester United and England."
Neville, whose brother, Phil, worked as a coach under Nuno, said he is looking forward to taking over.
"I am proud to have received a great opportunity with Valencia," he told the website.
"It is a massive club with prestige which I remember well from my time as a player.
"I am looking forward to starting to work with a group of talented footballers. It is an exciting challenge."
Despite Neville's limited knowledge of La Liga, Hodgson has backed him to succeed and says he will continue to work with England.
"It's the right moment in time for him and I'm 100 percent behind his decision," Hodgson told reporters.
"As far as I'm concerned this will be an extra string to his bow and the experience he will gain working in the Spanish league can only be beneficial to our work together with the England team."
(Reporting by Justin Palmer; editing by Sudipto Ganguly, Neville Dalton)
