The former Real Madrid and Spain player, whose full name is Jose Miguel Gonzalez Martin del Campo, has started immediately, Marseille said on their website (www.om.net) on Wednesday.
The club, who are hosting Troyes on Sunday after losing their first two Ligue 1 matches of the campaign, did not disclose the length of Michel's contract but Spanish media reported he had signed up for two seasons.
As well as trying to turn OM's fortunes around in the domestic French league, the 52-year-old will lead them in the Europa League group stage after they finished fourth last term to earn a berth in Europe's second-tier club competition.
"A new page in the club's history begins," OM said.
"A apostle of beautiful football, Michel demands a lot from his players.
"A product of the Spanish school, ball possession is an important virtue in his approach."
Michel spent virtually his entire playing career at Real, where he was a member of the so-called "vulture's cohort" of five homegrown players which also included Emilio Butragueno.
Michel made 66 appearances for Spain, scoring 21 goals, and after retiring in 1997 after a brief stint playing in Mexico had his first coaching job at Madrid club Rayo Vallecano.
He returned to Real after one season to coach their B team before taking over at Getafe and then Sevilla.
His only silverware as a top-level manager came in his most recent job, at Greek club Olympiakos Piraeus, where he won two domestic league titles and one Cup crown before leaving in January.
At OM he will link up with Spain Under-21 defender and fellow Madrid native Javier Manquillo, who is on loan from Atletico Madrid.
Argentine Bielsa, nicknamed 'El Loco' (the crazy one), joined OM last season after stints with Argentina (1998-2004), Chile (2007-11) and Athletic Bilbao (2011-13).
(Reporting by Brian Love and Iain Rogers, editing by Ken Ferris and Pritha Sarkar)
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