The 58-year-old has vast experience in Ligue 1 having managed top teams like Monaco, Lille, Lyon and Nice.
In June 2016, the Frenchman was appointed the manager of Southampton on a three-year deal but the contract was terminated after one season.
Under his tutelage, Southampton reached the League-cup final and finished 8th in the Premier league.
Puel was appointed manager of Leicester City in 2017, replacing Craig Shakespeare, but a poor run of form in his second season brought the end of his journey at the King Power Stadium.
Saint Étienne suspended their previous Manager Ghislain Printant, before his contract was terminated on Friday afternoon.
Saint-Etienne announced Puel's appointment with a statement on their official website, which read: 'AS Saint-Etienne is pleased to announce the appointment of Claude Puel as General Manager and Coach.
'The technician has engaged with the club until 2022. His arrival illustrates the will of the ASSE to continue the development of an ambitious sports project.
'Claude Puel will join the Management Board chaired by Roland Romeyer and will also include Xavier Thuillot, appointed Chief Executive Officer.
'On the pitch, Claude Puel will be assisted by Jacky Bonnevay, who will be his first assistant.'
The French side have won two of their opening eight fixtures in Ligue 1 and have picked up one point from their first two Europa League Group I games.
Following his appointment, Claude Puel explained why he took the job 48 hours before St Étienne’s game against their bitter rivals Olympique Lyon.
He said: “I wanted to be there for the derby. A derby must be won with courage and self-sacrifice. And after that there will be work and tactical construction.”
