Pellegrini has been without a club since he was sacked as West Ham United manager in December last year.
The 66-year-old Chilean will be taking charge of his fourth La Liga side after previous spells at Villarreal, Real Madrid and Malaga.
Real Betis parted company with previous manager Rubi last month following a run of just one win in 10 La Liga games.
Rubi was replaced by Alexis Trujillo until the end of the season and he has led the Andalusian side to two wins from five games to climb up to 13th on the league table.
Great expectations were expected of Real Betis at the start of the season after they splashed the cash on the likes of Borja Iglesias and Nabil Fekir.
Pellegrini took Villarreal to the semi-finals of the UEFA Champions League in the 2005/2006 season, losing to Arsenal and nearly replicated that feat with Malaga in the 2012/2013 season with a quarterfinal appearance.
Pellegrini’s most successful stint in Europe however came in England with Manchester City from 2013 to 2016, winning the Premier League title in his debut season and adding two League Cups before his departure.
