The 52-year-old coach was sacked by Reading in March after a string of poor results following promotion to the Premier League, but he has made a quick return to management.
Neil Warnock resigned at the start of April after a run of six games without a victory left the club short of the playoff places. The West Yorkshire outfit currently sits in 17th place in the Championship table, just five points above the relegation zone with five games of the campaign left to play.
“We are delighted to have appointed Brian as our manager,” read a statement by David Haugh, the deputy chief executive of GFH Capital, the company that owns Leeds. “He is a man with a proven track record of success and shares our vision of the best way to return long term and sustainable success to this great football club.
“Obviously the immediate aim is a return as soon as possible to the Premiership. Brian's success in taking Reading to the Premiership last year was a key factor in our decision to hire him.”
Warnock backed either McDermott or former Bolton boss Owen Coyle for the job recently, stating that it is not a role for a young manager.
"People like Brian McDermott would do a fabulous job, and Owen Coyle," Warnock told BBC Radio 5 Live. "There's quite a number of [suitable] managers, and I think there'll be a few more in the next few weeks. I do not think it is a job for a young man.
"It is a perfect role for an experienced manager like Brian McDermott or Owen Coyle."
McDermott takes immediate charge of the team and will be in the dugout for the Elland Road outfit’s crucial Yorkshire derby clash against Sheffield Wednesday and on-loan American Stuart Holden on Saturday.