The Austrian, 56, had been out of work since he was sacked by the Saints in November 2022.
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But on Monday he was appointed as Niko Kovac’s successor.
Kovac, 52, was sacked by the German club following Saturday’s 3-1 defeat at home to Augsburg.
Hasenhuttl’s first match in charge of the club will be at home to Werder Bremen on March 30.
Following his arrival in Germany, the manager said: “After four years in the Premier League, I just wanted to get away from it all.
“I really enjoyed walking the streets unrecognised. It was very pleasant and also necessary to regain my strength and hunger.
“It’s not that I was bored at home. But the knowledge that you have gained over such a long time as a head coach is longing to be put to good use. I’m looking forward to bringing all the experience I’ve gained as a coach to this club.
“I’m very happy to be back in the Bundesliga.
“For me, the decision was easy because I was able to recover for a long time and felt the hunger again. I didn’t have to think long to say yes to VfL.”
Hasenhuttl last managed in the Bundesliga when he was head coach of RB Leipzig between July 2016 and May 2018.
He departed with an impressive 40 wins, 19 draws and just 24 defeats from 83 matches.
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And he led the club into the Champions League for the first time in their history.
Prior to his time with Leipzig, he also achieved promotion to the Bundesliga with FC Ingolstadt.
He won 59 of 173 games with Southampton across nearly four years on the South Coast.
He was previously linked with joining German side Hoffenheim in February 2023 before the club opted to appoint American Pellegrino Matarazzo.
Paul Scholes wanted him to be appointed as Manchester United’s manager before Erik ten Hag arrived at Old Trafford.
Speaking to BT Sport in 2022, the United legend said: “I’ve always liked the football he plays at Southampton with not the best squad.
“The type of football has worked for them. His teams have been good to watch; I think it comes across really well.
“I think people around this club, and fans especially, are thinking more of possibly [Mauricio] Pochettino or an Antonio Conte and what people have been at the bigger clubs.
“The more I think about it, I don’t think [going for Hasenhuttl] would be a bad thing. The way he goes about his business, he looks good.”