The 51-year-old spent three-and-a-half years in charge of the Sevilla-based club from July 2010, guiding Betis to promotion in his first season before then securing UEFA Europa League football with a seventh-place finish in 2012-13.
Mel was dismissed as coach in December 2013 as his men failed to replicate their Europa League form in La Liga, and he swiftly ended up with West Brom in the Premier League, while Betis were ultimately relegated.
However, Mel lasted just half a season at The Hawthorns and he now finds himself back at Estadio Benito Villamarin, coming in as Julio Velazquez's successor after the 33-year-old was sacked in November.
Mel will join initially until the end of the season, with the option of a two-year extension should fourth-placed Betis gain promotion, while interim coach Juan Merino returns to the reserve side.
A Betis statement read: "Real Betis has chosen Pepe Mel as the first team coach. He will take over the direction of the verdiblanca team from Monday December 22 to lead the club to promotion.
"The agreement between Real Betis and Pepe Mel is until the end of the season, with an option for two more campaigns should we ascend to the Liga."
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