Sather fired Bryan Trottier on Wednesday, and bypassed a pair of experienced assistants to do the job himself.
He becomes the 31st coach in Rangers' history, and is with the team during their morning skate as they prepare for Thursday night's game against Colorado.
Sather cited a "lack of accountability and discipline," when he announced that Trottier had been fired. On Thursday, he decided to coach the team instead of Jim Schoenfeld or Terry O'Reilly.
The Rangers are last in the Atlantic Division with a 21-26-6-1 record and are on their way to missing the playoffs for an unprecedented sixth straight season.
New York won five of six games earlier this month to climb to within two games of .500, but sandwiched a pair of losses to lowly Atlanta around Sunday's 7-2 pasting at Washington.
"I hope this turns this team around and gets us into the playoffs and gets some success from a lot of people who have been making mistakes," Sather said Wednesday. "All of the players have to be held accountable."
Sather became the franchise's 12th president and 10th general manager in June 2000, and has assembled a team with the highest payroll in the NHL. He served 21 seasons as general manager of the Edmonton Oilers before joining the Rangers.
He has a record of 464-268-110 as a coach and guided the Oilers to four Stanley Cup championships. However, Sather has not coached since the 1993-94 season when he replaced Ted Green at Edmonton.
Trottier, 46, came to New York after four seasons as an assistant with the Avalanche, but he never won over Rangers' fans, who remember him as a member of four Stanley Cup championship teams with the archrival New York Islanders in the 1980s.
Trottier also won two Stanley Cups as a player with the Pittsburgh Penguins and another as an Avalanche assistant coach.
While Trottier had no previous head coaching experience before Sather hired him last June, the Rangers also have played long stretches without several key regulars.
Center Bobby Holik, who signed a five-year, $45 million contract in the offseason, missed 18 games with a hip injury. Superstar Pavel Bure has missed 24 games and remains sidelined following left knee surgery. Two-time Norris Trophy winner Brian Leetch has been out since early December with a bruised ankle, and goaltender Mike Richter suffered a season-ending concussion on Nov. 5.
Schoenfeld guided the Phoenix Coyotes to a 72-66-24 record from 1997-99 after stints with the Buffalo Sabres, New Jersey Devils, and Washington Capitals.
O'Reilly was 115-86-26 as coach of the Boston Bruins.
Trottier was the seventh NHL coach fired this season, following San Jose's Darryl Sutter, Calgary's Greg Gilbert, Colorado's Bob Hartley, Atlanta's Curt Fraser, Dave King of Columbus, and Michel Therrien of Montreal.