The Eagles have been looking for a new man to lead the side ever since Oliver Glasner confirmed he would be leaving the club back in January.
Glasner was a fan favourite in South London after bringing Palace their first-ever pieces of silverware, winning the FA Cup, Community Shield and UEFA Conference League.
Sage is also no stranger to winning trophies; the Frenchman guided Lens to their first-ever Coupe de France last season on top of a second-placed finish in Ligue 1.
In his 40 games in charge of the club, Sage won 27, drew five and lost eight. He will begin as Palace manager on July 1st, with the club set for their first foray into Europa League football.
The 47-year-old's first stint in management came in 2013 with amateur club Chambery before a decade-long break saw Sage return to coaching with Lyon in 2023.
Initially only an interim boss, he became permanent manager in January 2024 but was sacked just over a year later following a run of bad results.
"It's amazing to be here at Crystal Palace. I am excited by the history of the club, and by recent seasons," Sage told Palace's official website.
"Oliver Glasner achieved some amazing things, and now I have to do the same. That's why we come here with a lot of ambition.
"The dynamic here is really positive, and we are in this mindset too. We won last year – and we want to continue in this way, in a new club, a new project, but with a lot of winning habits.
"We want to give our best every day for the team, for the club, for the people, and especially for the fans, because when you love a club in England, it's for all your life.
"We want to give the fans what they want. We want to make the fans smile, to be proud of the team, and to be proud of the club – so we will give our best for you, and we are together."