'Good fit'
Swansea chairman Huw Jenkins, who remained in his role despite selling to an American consortium in July last year, said Clement would be a 'good fit' for the club.
"We are delighted with the appointment of Paul Clement as our new head coach," said Jenkins in a statement on the club website.
"Paul has not only worked with some of Europe's biggest football clubs, but also the very best players in the world.
"Swansea City's strength over many years had been the quality of the football coached on the training field.
"That has always been at the forefront of our success.
"There is no doubt in my mind that Paul can not only help us regain that footballing belief, but also restore some much needed pride back into the football club.
"We see this a typical Swansea City choice. It looks a good fit to get us back on track and provide one of the best young coaches in Europe with the chance to develop his own career and become a leading coach in his own right."
Clement, whose playing career never attained the heights of his father, former England international defender Dave, replaces ex-United States national coach Bob Bradley, who was fired last Monday after guiding the Swans to just two wins in 11 matches.
Bradley had been hired after Italian Francesco Guidolin -- who succeeded in preserving Swansea's Premier League place last term -- was sacked earlier in the season.
Clement, who many thought was unlucky to be sacked by Derby last February as he had led them to fifth place and were only five points adrift of then leaders Hull, has accrued an excellent reputation as a coach.
He has served as Ancelotti's assistant at not only Bayern but also Chelsea, Real Madrid -- where they won the 2014 Champions League -- and French champions Paris Saint Germain.
Clement faces a mighty task at Swansea, who are four points adrift of safety ahead of the Palace match.