Lyon fired coach Bosz on Sunday after his team racked up only one point in their last five French league games.
"In view of the disappointing results obtained at the beginning of the season, which fall far short of the expectations and objectives set, Olympique Lyonnais has informed Peter Bosz, coach of the professional team... that he was being suspended pending his dismissal," Lyon said in a statement.
"An internal reflection was carried out in order to find the necessary levers to allow the team to start again on solid bases in order to be in adequacy with the ambitions of OL this season.
"Following this process, Olympique Lyonnais have decided to appoint Laurent Blanc as head coach of the professional team for two seasons, until June 30, 2024."
Blanc led Bordeaux to the league title in 2009 before guiding PSG to three straight league titles from 2014 to 2016.
The firing comes at a sensitive time as Lyon president Jean-Michel Aulas has been in talks to sell the club to Eagle Football Holdings LLC, controlled by American businessman John Textor.
The deal was set to be finalised on Sept. 30, but has been postponed to Oct. 21 as both parties are still negotiating the financial details, especially a partial repayment of the debt to the club's lenders.
Lyon drew with promoted Toulouse 1-1 on Friday to snap a four-game losing streak, their worst run of form in the league since 1991. Bosz was booed by the fans when the stadium announcer read his name before kickoff.
Lyon were in seventh place before Sunday's games, eight points outside the top three spots.
Information from Reuters and the Associated Press was used in this story.