Luxemburgo, sacked two weeks ago by equally troubled Atletico Mineiro, became Flamengo's fourth coach this year, replacing Silas who presided over one win in 10 matches and was sacked on Monday.
"He's a coach with a curriculum that matches Flamengo. They are two parts that fit perfectly," club president Patricia Amorim said in a statement.
"I trust in his work and was quite satisfied that he accepted our proposal, which is a long term job. We are restating our commitment to the youth scheme," she added.
Luxemburgo, who played for Flamengo from 1971 to 1978, signed a contract until the end of 2012 and will try to change the bad impression he left when he was sacked as coach in 1995 without winning any titles in the club's centenary year.
Flamengo have been beset by internal squabbles which came to a head with the departure last week of their greatest player Zico after only four months as director of football.
They have won only one of their last 13 matches and are 15th in the Brazilian championship standings, four points above the relegation zone. Silas, appointed by Zico, was sacked after last weekend's 1-1 draw in the Rio derby against Botafogo.
Luxemburgo is the most successful coach in the Brazilian championship having won five titles with Palmeiras (twice), Corinthians, Cruzeiro and Santos. He held the Brazil job from 1998 to 2000 and spent the 2004/05 season at Real Madrid.
