Zola, 52, played for the Londoners from 1996 until 2003, scoring 80 goals, including the winner in the 1998 European Cup Winners Cup final.
He also won the Super Cup, two FA Cups and the League Cup.
“For me it is an amazing thing. I am very willing to work hard because it is going to be a difficult challenge but I am pleased to be here, and to work hard with Maurizio to be successful,” Zola said.
“It would be great to be successful with Maurizio and for the club and I will give my best, as I did in the past as a player, so I will give my best in my new position.
“I am very much looking forward to the challenge in general. I would love us to start well and we are all very excited to start this new adventure.”
Zola also played club football for Napoli and Parma and won 35 caps for Italy.
As a coach, he has managed West Ham, Watford and Birmingham City who he left in April 2017 with the team just above the relegation zone.
Would you like to place a soccer bet? Click here to get started in 3 easy steps.