Warnock's appointment was announced in a two-sentence statement on Palace's website, which said he would be in charge for Saturday's match against Newcastle. Palace has lost its first two games, against Arsenal and West Ham.
Palace's preparations for the season were thrown into turmoil when Tony Pulis quit just 36 hours before the opening match.
Former Cardiff manager Malky Mackay was on the verge of being announced last week as Pulis' replacement. But a deal was scrapped after Mackay was accused by Cardiff of sending a string of inappropriate text messages during his time at the Welsh club, a controversy that is now the subject of a Football Association investigation.
Since then, Tim Sherwood, Neil Lennon and Steve Clarke have been linked with the vacancy but Palace turned to a coach who spent 2½ years at Selhurst Park from 2007-10, when the south London club was in the second-tier League Championship.
Warnock left after Palace slipped into administration and was handed an automatic 10-point penalty.
One of Warnock's first tasks at Palace likely will be talking to midfielder Jason Puncheon, who was fined 15,000 pounds ($25,000) by the FA in March for comments made on Twitter about Warnock.
Warnock had criticized Puncheon for missing a penalty against Tottenham, saying: "There's no way I would've trusted him with a penalty. You've got to have somebody a little bit more cool, and he's not like that, Jason."