Alonso who quit the Uruguay job after failing to get the team past the group stage at last year's Qatar World Cup, replaces Jose Luis Mendilibar (62), who was sacked on Sunday.
Mendilibar helped Sevilla climb out of the relegation zone last season and win the Europa League final against AS Roma but they have struggled this term and are a lowly 14th in LaLiga.
"Sevilla FC and Diego Alonso have reached an agreement for the Uruguayan to become the Blanquirrojo's new coach until the end of the current season," the club said in a statement.
The experienced Alonso has managed several Latin American teams including Penarol, Olimpia in the Uruguayan top flight plus Pachuca and Monterrey in the Mexican league.
Sevilla next host LaLiga leaders Real Madrid on October 21st.