The 38-year-old has signed a three-year contract at the Allianz Arena after moving on from Turf Moor after two seasons.
His assistant Craig Bellamy has been placed in temporary charge while the club identifies a permanent replacement, with Mike Jackson his number two.
But who will get the job on a full-time basis?
Here are the current favourites, according to Skybet:
(Odds were correct at the time of writing)
But who will get the job on a full-time basis?
5. Graham Potter - 33/1
Remains out of work after leaving Chelsea last year and has recently turned down the chance to manage Ajax. Likely to hold out for a job higher up the pyramid.Photo: JUSTIN TALLIS
6. John Terry - 33/1
The former England defender is still waiting for his first role as the number one having coached with Aston Villa, Chelsea and Leicester.Photo: Tom Dulat
7. Martí Cifuentes - 28/1
Helped turned around QPR's fortunes in the Championship last season after arriving at Loftus Road in October of last year. Thought to be admired by those inside the club.Photo: Nathan Stirk
8. Will Still - 25/1
Free to take his next job after leaving French side Reims at the start of this month. Linked with a few vacancies recently, including Lens and Sunderland.Photo: FRANCOIS NASCIMBENI