The 67-year-old former Real Madrid and Chelsea manager has answered a call from Phillip Cocu to assist him at the Eredivisie club, the PSV coach revealed to the press on Friday.
Hiddink has been without a club since resigning from Anzhi Makhachkala in July, having insisted that he had taken the Russian side as far as he could.
He is in line to replace the departing Louis van Gaal as Netherlands national coach after the FIFA World Cup, but has agreed to return to the Philips Stadion on a short-term basis to aid the 21-time champions.
"There was already a contact," said Cocu ahead of his side's clash with Twente on Saturday. "But now we are giving (it) an official interpretation.
"We are delighted that someone with his experience wants to do this. Hiddink is a club icon."
The move will represent Hiddink's third spell at PSV, having taken charge of the club as coach between 1987-1990 and 2002-2006.
He led them to 12 major trophies during that time, including the Eredivisie title six times and the 1988 European Cup.
Under Cocu, PSV have struggled this season and their title bid already looks to be over with the club in seventh, 15 points behind leaders Ajax.
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