The 69-year-old also managed the Blues on a temporary basis for the final three months of the 2008-09 campaign.
"I am excited to return," said the Dutchman. "Chelsea is one of the biggest clubs in the world but is not where it should be at the moment. "However, I am sure we can all turn this season around."Mourinho was sacked on Thursday with champions Chelsea 16th in the Premier League table, one point above the relegation zone.
Hiddink watched Saturday's visit of Sunderland from the stands, sat next to Chelsea owner Roman Abramovich and former Blues striker Didier Drogba.