Henry replaces Leonardo Jardim, who was dismissed on Thursday after six points from their opening nine matches left them languishing 18th in Ligue 1.
The 41-year-old made his professional debut for Monaco inv1994 before going on to enjoy prolific spells at Arsenal, Barcelona and New York Red Bulls.
After two years as Roberto Martinez’s assistant with the Belgium national side, he has now been tasked with reviving a team who only two seasons ago won the league and reached the semi-finals of the Champions League.
“I want to thank Monaco for giving me the opportunity to coach the a club that so special to me,” he told the club’s official website.
“I am very happy to come back to Monaco and extremely determined to meet the challenges ahead. I cannot wait to meet the players and start working together.”
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