Tony Granato was demoted to assistant coach.
A former coach of the St. Louis Blues, Quenneville served as an assistant for the Avalanche's 1995-96 Stanley Cup-winning team.
The 45-year-old Quenneville was fired by the Blues last February. He was slated to coach Canada's entry at the World Championships in April, but was treated for exhaustion and replaced by Mike Babcock.
Granato was unable to match his regular-season success in the playoffs in two seasons with the Avalanche.
Under Granato, the Avalanche compiled a two-year record of 73-44-17. But they were stunned by Minnesota in the opening round of the 2003 playoffs, had their NHL-record string of division titles snapped at nine this spring and were eliminated by San Jose in the Western Conference semifinals.