Ramalho, considered last year for the Brazil job left vacant after the World Cup, quit 2010 Brazilian champions Fluminense in mid-March complaining of a lack of facilities. At Santos' Vila Belmiro premises, he will enjoy a modern training complex.
"I liked the attitude of the board who showed transparency, seriousness and good planning. That's why we reached an agreement," the 55-year-old said on the club's website.
Ramalho, who last year won his fourth Brazilian championship in five years after a hat-trick of titles with Sao Paulo, faces the enticing job of managing Brazil's biggest finds of recent times in Neymar and Paulo Henrique Ganso and meeting the fans' demands for titles before they are scooped up by European clubs.
Last year, Ramalho turned down the Brazilian Football Confederation's (CBF) offer to replace World Cup coach Dunga because Fluminense would not release him from his contract.
