The 50-year-old Ford, also a former England assistant coach, was promoted from backs coach one month after joining the club following the sacking of Diego Dominguez.
"(Mike Ford) has accepted this mission. I will not comment on the reasons for my decision," club president Mourad Boudjellal said in a statement.
Media reports suggest that Dominguez, who started as head coach this season, was reluctant to see Marc Dal Maso take charge of the forwards and that led to his dismissal.
Toulon are fourth in the French Top 14 after losing three of their first eight games. Playing conservative rugby, they also lost their first Champions Cup game at home to Saracens before beating Sale in unconvincing fashion.
It leaves Ford, who coached the England defence and helped the team reach the 2007 World Cup final, with a huge task ahead.
"The weight is now on his shoulders," said Boudjellal, who was reportedly interested in hiring former France international Fabien Galthie for the job.
Ford, who was sacked by Bath one year after taking the club to the Premiership final, is also expected to bring his rugby league background to Toulon's game.
"On the field, it gives great variety to the game with players who play very close to the opponent's defence," Castres Olympique's Horacio Aguella, who played under Ford at Bath, was quoted as saying by sports daily L'Equipe on Tuesday.
Off the field, Boudjellal is seeking to sell the club, saying on Monday he would wait until Dec. 15 before making an announcement.
Toulon's next game is a Top 14 fixture at home against Grenoble on Saturday.
(Reporting by Julien Pretot, editing by Pritha Sarkar)
