Lampard's immediate task will be to move Chelsea up the Premier League table from their current eleventh position and try get past European Champions Real Madrid in the UEFA Champions League quarterfinals.
Chelsea sacked Graham Potter on Sunday after less than seven months in charge.
Bruno Saltor took charge of Tuesday's goalless draw with Liverpool at Stamford Bridge.
Lampard himself was sacked by Everton after less than a year in charge back in January.
Lampard previously spent 18 months in charge of Chelsea before getting sacked in January 2021 for Thomas Tuchel, who led the club to Champions League glory at the end of the 2020/2021 season.
Chelsea co-owners Todd Boehly and Behdad Eghbali told the club's official website: "We are delighted to welcome Frank back to Stamford Bridge. Frank is a Premier League Hall of Famer and a legend at this club.
"As we continue our thorough and exhaustive process for a permanent head coach, we want to provide the club and our fans with a clear and stable plan for the remainder of the season.
"We want to give ourselves every chance of success and Frank has all of the characteristics and qualities we need to drive us to the finish line.
"We have an important game against Wolves on Saturday and then we will turn our attention to our Champions League quarter-final in Madrid next week.
"We are all going to give Frank our full backing as we aim to get the best possible outcome from all our remaining games."
