The former England, West Brom, Liverpool, Fulham and Blackburn manager replaces Frank De Boer who was sacked on Monday after just four games in charge of Palace as the Eagles lost all four games and failed to score a goal to open up the Premier League season.
3 - Hodgson will become the third oldest manager to take charge of a Premier League game, behind Bobby Robson and Alex Ferguson.
The experienced 70-year-old has previously held managerial positions at the likes of Inter Milan, Liverpool and West Brom, as well as at global level with Finland and England.
Hodgson's last Premier League job was with West Bromwich Albion before taking over as England manager in 2012.
Earlier this year, he held talks with Leicester City as a potential candidate to replace Claudio Ranieri.
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Hodgson told the club's official website: "It is very rewarding to find myself here now, in different times, as the Palace manager at a club that I have always loved and admired with a huge potential".
The 70-year-old Hodgson signed a two-year contract with his boyhood club.
Another former Rangers player on the now-you-see-me-now-you-don't list is Henning Berg who was sacked by Blackburn Rovers following a 57-day interlude in 2012 when he won only one of 10 games. We are the club of south London, with an enormously large fan base.
"I hope it's close".
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"I am very excited to be back in club football", added a delighted Hodgson.
"We've got to work hard to get back on track but I know that my attitude is shared by the players and it is my job to let them know what I want from them".
He has managed some 16 clubs, beginning his career in Sweden, where he won five Swedish titles with Malmo FF, before reaching the final of the UEFA Cup with Inter Milan in 1997.
Hodgson's side went on to enjoy a fairytale season in 2009-2010, finishing runners-up to Atletico Madrid in the Europa League final - their first major European final appearance.
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