The 57-year-old coach, who has been out of the game since being fired by Nantes three years ago, has put pen to paper on a contract which ties him to the Stade Velodrome until 2014.
"Elie Baup is named coach of l'OM for two seasons," a statement on the club's website read.
"He should now travel to Crans-Montana, where the players have been in training since Wednesday. He will be presented to the press on Thursday afternoon."
Baup won the Ligue 1 title with Bordeaux in 1999 and drew plenty of plaudits for guiding Toulouse into the qualifying stages of the Champions League on the back of a stunning third place finish in Ligue 1 five years ago.
However, the club only just beat the drop the following season and he took Nantes down after moving to the Beaujoire-Louis ahead of the start of the 2008/09 campaign.
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