The 46-year-old has signed a three-year contract to replace Sam Allardyce who left Upton Park at the end of last season.
Former international defender Bilic played for the Hammers from 1996 to 1997 and was a popular figure who will be welcomed back by supporters.
"I'm really glad to be back with West Ham United," he told the club's website (www.whufc.com).
"It's in the Premier League, which is among the best in the world. It's a big challenge and you are competing with the best and what better club to do it with than West Ham?"
"It's a big privilege and a big responsibility to now be manager. I would say to the West Ham fans that I will give my best and together we will achieve great things."
The tough-tackling Bilic joined West Ham in 1996 for a then club record transfer fee of 1.3 million pounds ($1.99 million) and helped the side avoid relegation before joining Everton in 1997.
He won 44 caps for Croatia, scoring three goals, and managed his country for six years from 2006 to 2012, winning 42 of his 65 matches in charge.
Bilic also had spells managing Hajduk Split in his native Croatia, Russian side Lokomotiv Moscow and most recently Turkey's Besiktas, whom he left last month.
West Ham finished 12th in the Premier League last season and decided not to renew Allardyce's contract.
Bilic will have to get down to work quickly. Having qualified for next season's Europa League by way of the Fair Play League, West Ham could be playing in it as early as July 2.
More important is consolidating their Premier League status during the final season at Upton Park before moving to London's Olympic Stadium.
Staying in the top tier would also ensure a share of the lucrative new domestic television deal that begins in 2016.
($1 = 0.6524 pounds)
(Writing by Steve Tongue and Tom Hayward; Editing by Ed Osmond)
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