Garde, 51, managed Lyon from 2011 to 2014, winning the Coupe de France title in 2012. He took over at Aston Villa in November 2015 with the club sitting last place in the Premier League but exited the subsequent March ahead of the teams's relegation at season's end.
"We believe Remi Garde's tremendous experience, his vision and knowledge of the game and his intimate understanding of youth development will give this club a new start at every level," Impact owner Joey Saputo said.
The Frenchman takes over at Stade Saputo after the exit of Mauro Biello, who led the Impact to the playoffs in 2015 and 2016 but saw the club miss out on the postseason this year while finishing ninth in the East at 11-17-6.
Garde is the fifth coach since the Impact kicked off in MLS in 2012, following Jesse Marsch, Marco Schallibaum, Frank Klopas and Biello.