The 41-year-old was given permission to speak to Chelsea by Derby County - who he managed for just a single season - as the Blues looked to replace Maurizio Sarri, who left after one year to join Italian champions Juventus.
Lampard, who is Chelsea’s all-time record goalscorer, said "I am immensely proud to be returning to Chelsea as head coach.
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Everyone knows my love for this club and the history we have shared, however, my sole focus is on the job in hand and preparing for the season ahead
"I am here to work hard, bring further success to the club and I cannot wait to get started."
Lampard has only spent one year in management, where he took Derby County to the Championship play-off final.
He returns to Stamford Bridge with Chelsea under a transfer ban, and a renewed expectation from the club’s fan base to promote more players from within the academy.
He will be working with former team-mate Petr Cech, who has been appointed as the club’s Technical Director.
He brings his assistant manager Jody Morris, another former Chelsea midfielder, with him as well as coach Chris Jones.
Former Chelsea midfielder Eddie Newton and highly thought of academy coach Joe Edwards, both already employed at the club, will also be promoted to be part of Lampard’s staff.
Lampard made 648 appearances for Chelsea in total throughout his career, scoring 211 goals and captaining the team in the 2012 Champions League victory over Bayern Munich.
As well as that trophy he helped the team win three Premier League titles, four FA Cups, two League cups and one Europa League.
He is widely regarded to be one of the greatest, if not the greatest, players in Chelsea’s history.
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