Arena, 57, the seventh coach in the Major League Soccer franchise's history, won two MLS Cups when he was coach of D.C. United. He has a 77-51-10 regular-season record as an MLS coach and is 14-5-2 in post-season play.
Despite having David Beckham and Landon Donovan on their roster, the Galaxy face the prospect of missing the playoffs a second year in a row. With a 6-8-6 record with four losses and four ties in their last eight matches, Ruud Gullit resigned as coach a week ago and General Manager Alexi Lalas was fired.
"While it has been a very difficult week, I believe the end result is a very positive step forward for the Galaxy," said Tim Leiweki, team president and chief executive officer said. "Bruce is the best coach for the Galaxy and certainly one of the best coaches in the history of the league."
Arena said he was excited to be taking the job, though he said there is "a lot of work ahead of us."
"My ultimate goal is to win championships and build a club that all of our fans will be proud of," Arena said.