Interim Athletic Director Carl Kirschner introduced Jordan at a news conference, saying he was the right choice to replace Rice, who was sacked after video footage showed him verbally and physically abusing players at practice.
"I have come to know Eddie Jordan as an open, honest and terrific person to lead our men's basketball program," Kirschner said. "Rutgers is very fortunate to have Eddie return to his alma mater to restore pride in the program."
Kirschner took over the AD's position temporarily after the Rice incident led to the resignation of former Athletic Director Tim Pernetti.
Jordan, who as a player helped lead Rutgers to its only NCAA Final Four appearance in 1976, was a head coach in the NBA for nine seasons, compiling a 257-343 mark with Sacramento, Washington and Philadelphia.
He takes the reins of a Scarlet Knights squad coming off six straight losing seasons.
"This is going to be a challenge, but a wonderful challenge," said Jordan. "There is a lot of work to be done."