Ruddock, who led Wales to a 2005 RBS 6 Nations Championship clean sweep, has agreed a three-year contract at Sixways.
The 47-year-old takes over from John Brain, who left the club on Monday just 48 hours after Worcester secured Guinness Premiership survival by finishing one point above relegated Northampton.
Despite Wales securing their first Grand Slam for 27 years during Ruddock's reign, he left the post suddenly midway through last season's Six Nations campaign.
The reasons for his departure have never been fully explained, although so-called player power was believed to be a factor.
Ruddock, who has been assisting his local club Mumbles in a coaching capacity, will inherit a Worcester squad that has already been strengthened for next season by the signing of All Blacks centre Sam Tuitupou, while most of the existing playing group have already agreed to stay at Sixways.