Collins, 58, played eight seasons with the 76ers, averaging 17.9 points, and was a four-time All-Star. He replaces Eddie Jordan, who was fired after one season.
"He has been around basketball his entire life, has experienced success at every step throughout his career and we are confident in his ability to lead our team," Sixers general manager Ed Stefanski said in a statement on the team's website (www.nba.com/sixers).
Terms of his contract were not announced but Philadelphia media reported he received a four-year deal to turn around the Sixers, who were 27-55 this season.
(Reporting by Gene Cherry in Raleigh, North Carolina)