Nice said Favre returned after a first spell, from 2016-18, that was ``engraved in the history'' of the club.
Favre's first season ended with a third-place finish in Ligue 1 and entry into the Champions League qualifying rounds.
Nice owner Jim Ratcliffe said in a letter to fans that Favre commanded ``respect and admiration'' and his preferred style of play fit perfectly with what the club wants.
After two years at Nice, Favre was lured to Borussia Dortmund where his teams twice finished runner-up in the Bundesliga before he was fired 18 months ago.
Favre takes over a Nice team that placed fifth last season and will play in the Europa Conference League qualifying rounds in August.
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