Pioli guided Chievo to 11th place in Serie A before leaving the club earlier this week. The 45-year-old has signed a two-year contract with the Sicilian side.
A statement from Palermo read: "Stefano Pioli is the new coach of Palermo. The Italian tactician has signed a two-year contract with a the option of a third."
Rossi parted company with Palermo this week after leading them to the final of the Coppa Italia, which they lost 3-1 to Inter Milan last weekend.
Palermo, who finished eighth in Serie A, will play in the UEFA Europa League next season.

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