He replaces Maurizio Sarri, who left the Blues for Juventus on June 16, 2019.
With little coaching experience, Lampard debuted as a coach last year when he was appointed as the manager of championship side Derby County.
He took the club to a top-six spot in the league and qualify for the playoffs. They then beat Leeds United in the semi-finals, but lost the promotion final to Aston Villa.
