The 47-year-old, who played for Roma for four seasons between 1997 and 2001, has signed a two-year contract with the capital club.
Di Francesco served as Roma's team manager in 2005-06 but truly made a name for himself during a celebrated five-year spell with Sassuolo, during which time he led them to Serie A for the first time in 2013.
Last season's Europa League campaigned marked further new ground for the Modena outfit and Di Francesco was identified as a frontrunner for the Roma post after Luciano Spalletti's stood down at the end of the season.
Spalletti led Roma to second place in Serie A and was confirmed as Inter's new coach last Friday, with Di Francesco's own appointment coming a matter of hours after Sassuolo confirmed his departure by mutual consent on Tuesday.
"I am extremely happy to be able to return to Roma, to coach a club that has always meant a lot to me," Di Francesco said on the club's official website.
"I am grateful to president [James] Pallotta and the board for this opportunity. I will give everything I have to make sure this team gets the results they deserve."
Spalletti identified Di Francesco as having "the human qualities you need, as well as the coaching skills," to lead Roma when asked last month and Pallotta heartily endorsed an appointment led by recently installed sporting director Monchi.
"When we sat down to discuss the ideal candidate for the role of Roma coach, we wanted someone who could come in and get the very best out of our first team players and also help bring through some of the great young talent coming out of our academy," Pallotta said.
"Our new sporting director Monchi singled out Eusebio di Francesco and, with his style of play, we believe he's the right fit for Roma."
Sassuolo paid a warm tribute to Di Francesco with a statement on their official website when announcing his departure.
"They were unforgettable five years [with Di Francesco], five years of memorable victories and dreams realised," it read.
"Every other word would be superfluous. Thank you, we just wish you a future full of success and satisfaction. You're one of us, always."