Michel has taken over at Malaga just hours after former head coach Marcelo Romero was let go.
Michel has been out of work since a disastrous spell at Marseille, where he was dismissed after less than a season in charge with the club 15th in Ligue 1, six points clear of the relegation zone with four matches left to play.
The 53-year-old takes over from Romero, who only succeeded Juande Ramos in December and oversaw just one win in 10 LaLiga matches.
"It is an honour for me to join this great club. I am happy and with desire to start working," Michel tweeted.
An official Malaga statement said: "Michel will be the new Malaga coach until the 2017-18 season.
"The coach will lead his first training session with the first team tomorrow [Wedensday] morning and later will be presented at La Rosaleda."
Michel's first match in charge will be at home to Alaves on Saturday, with 15th-placed Malaga in danger of being dragged into a relegation scrap after three straight losses.