The 57-year-old returns to Loftus Road, where he has previously spent a few months working as first-team coach in 2013, as Ian Holloway's successor.
McClaren, whose most recent coaching job in English football came at Derby County in the 2016-17 season, says that he is looking forward to getting stuck in at QPR.
Speaking to the Hoops' official website, the ex-England boss said: "It's great to be back - and it's a challenge that I'm excited by. I must admit that I've followed the club closely over the last five years, because of the three months I had here.
"From the outside, I've seen the progress, work and changes that have gone on - especially over the last two years - in streamlining the squad and getting the budget down. The Board and owners deserve credit for that
"The introduction of younger players has been a breath of fresh air and it's exciting for the future. I like to play attractive, attacking football - and we've got young, hungry footballers here who can play that way. The priority is to win football matches - but we want to win them in a certain style."
Director of football Les Ferdinand added: "We are delighted to bring Steve to the club. He has a fantastic reputation in the game for coaching and developing players. When you look at the average age of our squad, and the exciting young talent starting to emerge, he is the perfect fit for us.
"We want Steve to use his expertise and experience to help our players grow. We are delighted with this appointment and, speaking with Steve, I know how excited he is to be here and how determined he is to be a success."