"We have an agreement that Sven-Goran Eriksson will join our coaching staff," the club's board chairman Otto Steiner said today after an all-night meeting at the club offices.
"Alexander Schmidt will remain our coach."
The exact role of the 64-year-old Swede, who has served as technical director of Thai club BEC Tero Sasana since September last year and has also managed AS Roma, Manchester City, Lazio, Sampdoria and Benfica among others, will still need to be defined, Steiner said.
One of the founding members of the Bundesliga and the city's most successful club before the arrival of Bayern in the mid 1960s, 1860 have been reduced to a minor role, currently playing in the second division.
Eriksson coached England from 2001-2006, failing to win any trophies.