The former Uruguay international had been assistant coach to Juande Ramos, who left by mutual consent on Tuesday following a run of five matches without a win.
“Marcelo Romero will stay at the helm of the team,” a Malaga statement confirmed.
“The ex-Malaga player and current member of the coaching team over the last three seasons will be head coach of the first team indefinitely.”
Romero spent six years as a player at La Rosaleda and returned to the club in 2014 to join the coaching staff of Javi Gracia.
His only prior experience as a head coach was with Uruguayan side Alhaurin de la Torre.
Malaga – who sit 11th in LaLiga – travel to Celta Vigo on January 8 following the mid-season break.
