Farina, who coached the Socceroos from 1998 to 2005, will take charge for the rest of the season after his predecessor Ian Crook quit earlier this month saying the weight of expectation after Del Piero's arrival had proved too great.
Despite the former Italy and Juventus great's sometimes sparkling form, Sydney are languishing in 10th and last place in the A-League after eight matches of the season.
The 48-year-old Farina will interrupt his spell as coach of the Papua New Guinea national team to return to Australia for this weekend's match against Melbourne Heat at Sydney Football Stadium.
A sometimes divisive figure, Farina's last coaching post in Australia came to an end when he was caught drink driving on his way to training at the Brisbane Roar in October 2009 and sacked by the club.
"This is a fantastic opportunity," he said.
"There is a lot of attention on Sydney FC and I'm looking forward to getting to Sydney and working with the players and staff to create an environment where we can be successful on the pitch.
"There are some very good players at the club, some of which I've worked with previously, and I've got no doubt that with hard work we can turn things around and get Sydney FC heading in the right direction."