The 48-year-old had been out of management since resigning as Italy head coach in April, when the Azzurri failed to qualify for the 2026 World Cup for a third consecutive tournament after losing to Bosnia and Herzegovina in a play-off. Roberto Mancini is now expected to take charge of the national team.
Sarri, whose second spell at the Stadio Olimpico was marked by public friction with president Claudio Lotito, has already been presented by Atalanta.
Lazio's official statement was brief and to the point: "S.S. Lazio S.p.A. announces that it has appointed Gennaro Gattuso as head coach of the first team."
The club added they are "warmly welcoming their new coach and are convinced that his experience, professionalism and determination will contribute to achieving the club's sporting goals."
Gattuso arrives with a coaching career that has taken in Napoli, Valencia, Marseille and Hajduk Split, as well as 13 months in charge of the Italian national team. He made 468 Serie A appearances for AC Milan as a player and won the Champions League twice, along with two league titles and 73 international caps.
Lazio finished ninth in Serie A last season. Gattuso is expected to implement a high-tempo, pressing-based 4-3-3 at Formello and has been promised four or five new signings by the club's hierarchy.