The 54-year-old has become Betis's third manager this campaign after Juan Carlos Garrido was relieved of his duties at the weekend.
Calderon, who made over 100 appearances for Betis between 1983 and 1987, takes charge with the team currently bottom of La Liga on 11 points.
"I've come here with the hope and conviction that we can get out of this situation," he told the club's official website.
Calderon has previously managed Saudi Arabia, the United Arab Emirates and Bahrain. It is believed that his contract with Betis will run until the end of the season, with the option of an extension if the Seville outfit remain in Spain's top flight.