Matarazzo returns to Hoffenheim after working with their under-17 team and as the assistant coach of the first team between 2017 and 2019.
The Italian-American then became the head coach of VfB Stuttgart and helped them earn promotion to the Bundesliga six months after joining the club.
He led them to a ninth-place finish in his first full season in charge but was sacked in October 2022 after the club were winless in nine games into the 2022-23 Bundesliga season.
Matarazzo, who has signed a contract until June 30th 2025, will be tasked with turning around the fortunes of Hoffenheim who are 14th in the Bundesliga with 19 points, three above the relegation playoff spot.
"As I've been living in the region since 2017, I've witnessed TSG's development first-hand even after my departure and have followed it particularly closely due to my history with the club," Matarazzo said.
"The situation is undoubtedly demanding," he said. "I'm convinced of the team's quality and will approach the task full of verve and with great confidence."
Hoffenheim sacked Breitenreiter on Monday after a poor run of form.
Matarazzo's first game in charge will be Saturday's home league game against Bayer Leverkusen.
