Terms of the deal were not disclosed by the team for Phillips, who will work under Sean McVay, who at 30 years old is the youngest head coach in league history.
"Wade has seen it all in our league, and I believe that his wealth of knowledge and experience will be a tremendous asset to our entire coaching staff and players," McVay said of the 69-year-old. "Our defense has been one of our core strengths and I expect it to continue to grow and thrive under Wade's leadership."
A longtime NFL assistant who got his first coaching job in 1976, Phillips spent the last two seasons as the Denver Broncos' defensive coordinator. He will guide a Rams' defense that ranked ninth in the NFL last year under Gregg Williams, who left to fill the same job with the Cleveland Browns.
Phillips' contract with Denver expired after last season and Broncos head coach Gary Kubiak resigned because of health considerations. In 2015, Phillips was the coordinator of a defense that helped the Broncos win the Super Bowl.
Phillips' experience spans 25 years and 39 years in the league with seven teams. He also has head coaching stints with the Broncos, Buffalo Bills and Dallas Cowboys, and he was an interim coach for the New Orleans Saints (1985), Atlanta Falcons (2003) and Houston Texans (2013).