"Villarreal have reached an agreement with Miguel Angel Lotina for him to take charge of the first team until the end of the season," the club said on their website.
Lotina, who won the King's Cup with Espanyol in 2006 and has also coached Deportivo La Coruna and Celta Vigo, will oversee training on Monday morning before holding a news conference later in the day.
Villarreal terminated Molina's contract after Sunday's 1-0 defeat at Levante, having taken only one point from their last five matches.
The former goalkeeper was promoted from B team manager in December to replace the sacked Juan Carlos Garrido.
Villarreal, who reached the semi-finals of the Champions League in 2006, are 17th in the table with 27 points, three above the relegation zone with 11 matches left.
They finished fourth last term to qualify for the Champions League but lost all six group games after being hit by a host of injuries.
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