The experienced coach will return to the Eindhoven-based club on a one-year basis after he decided to quit his international coaching job in the summer.
The 64-year-old had announced last week that he would step down as Russia coach after the end of Euro 2012, two years after taking over from compatriot Guus Hiddink.
During his one-year tenure with the Dutch club, Advocaat will educate assistants Philip Cocu and Ernest Faber for one of them to replace him at the end of the season.
Cocu was appointed as caretaker coach in March after PSV decided to sack Fred Rutten, but the 41-year-old recently admitted that he is not yet ready for the job.
Advocaat will now return to PSV after previously coaching the club between 1995 and 1998, during which he led the Eindhoven outfit to one Eredivisie title, one Dutch Cup and two Dutch Super Cups.
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