The ex-Hammers midfielder returns to the club in a bid to lead them out of the Championship following last season's relegation and a slower-than-ideal start to the current campaign.
West Ham currently sit eighth in the table despite boasting one of the division's strongest squads, and have turned to Parker to improve their fortunes.
“It is a very proud moment for me to step into this role and return to a club that means so much to me and my family," Parker said.
"A lot of very fond memories of my time here - four years of probably the best football I played in my career.
“There was a warmth, a love, a feeling that I probably didn’t have anywhere else. There was something which stood out constantly, and that was the relationship that I built up with the fanbase here. That rapport and respect, that I felt instantly.
“More than anything, this is an opportunity that I am very excited about. I feel privileged and honoured to be the guy that wants to lead us back to the Premier League and be the Head Coach of this Football Club at this moment in time."
The Englishman has experience winning promotion from the Championship, having won the play-offs with Fulham as well as automatic promotion with both Bournemouth and Burnley.
Parker's most recent campaign in the second tier was especially impressive, with his Burnley side conceding just 16 goals from 46 games and finishing second on 100 points, only missing out on the title to a last-minute Leeds goal on the final day.
The Clarets' James Trafford equalled the record for most clean sheets by a goalkeeper in a single English football league season with 29.
Parker is arguably inheriting just as strong a squad this time around, with the likes of Jarrod Bowen already on 12 goal contributions for the season. At the same time, defender Konstantinos Mavropanos has consistently excelled in the opening months of the campaign.
West Ham's first fixture under new management is against Cardiff on Wednesday, November 4th.
