The 67-year-old Long Island native has been out of work since leaving a second spell with the USMNT.
He resigned from that position after failing to secure qualification for the 2018 World Cup in Russia.
Arena may have failed in that task, but retains the winningest record as coach of the USMNT.
Arena replaces Brad Friedel as head coach and Mike Burns as general manager, both of whom were fired in the past week.
“Bruce is one of the most successful coaches in American soccer history, and we feel his commitment to excellence, track record of winning championships in Major League Soccer, as well as his success at the international level, makes him the best person to bring the Revolution back to MLS Cup contention," Revolution Investor/Operator Robert Kraft told the club’s official website.
“We have known Bruce dating back to the advent of MLS, and we have full confidence that he will raise the level of our club to the standard we all expect and demand.”
New England Revolution (@NERevolution) May 14, 2019
Arena is to take on sporting director duties in Boston with immediate effect, but a start date for his coaching commitments is yet to be determined.
“It was evident when talking with Bruce that we share a vision for the future of the Revolution and we look forward to having him oversee our soccer organization,” said Revolution president Brian Bilello.
“We believe that now is the time for a change in leadership and there is no one better suited to usher in a new era of success in New England.”
Arena, who spent two years with D.C. United and a year with the New York Red Bulls either side of a first successful stint with the USMNT is looking forward to getting started in a new job.
He has been out of club management since ending an eight-year spell with the LA Galaxy in 2016, but is planning to hit the ground running.
Arena has said of the opportunity presented to him by the Revolution: “In my conversations with the Kraft family and Brian Bilello, it’s clear that they have high expectations for the club and I believe there is a tremendous opportunity for me to create a winning culture throughout the Revolution organization.
“Boston is a great sports town with a history of championship teams, and I am looking forward to working with the staff and players to make the Revolution a club that our supporters can be proud of and that can be part of the tradition of success in New England.”