The 61-year-old Italian replaces Luis Zubeldia, who was sacked following last weekend's 3-0 home defeat at the hands of Villarreal.
De Biasi, who led Albania to the finals of Euro 2016 last year, takes over an Alaves side who have yet to pick up a point or score a goal from five La Liga matches this season.
A club statement read: "Alaves have finalised the appointment of Gianni De Biasi.
"The coach arrives at the club after a long career in Serie A, La Liga and international level, with the Albania national team.
"The coach has committed himself to the club until the end of the season, with an option for another year."
Second-from-bottom Alaves play host to Real Madrid on Saturday.