Payne, the first coaching casualty of the young season, was relieved of his duties after leading St. Louis to a 6-7 record that left them 13th in the 15-team Western Conference.
The Blues failed to make the playoffs since he took over as coach during the 2009-10 season.
Hitchcock, who was coach of the Dallas Stars when they won a Stanley Cup in 1999 and an assistant with Canada when they won gold medals at the 2002 and 2010 Olympics, agreed to a contract through the 2012-13 NHL season.
The 59-year-old last coached in the NHL for the Columbus Blue Jackets in the 2009-10 season and has coached more than 1,000 games with Dallas, Philadelphia and Columbus.
(Reporting by Frank Pingue in Toronto; Editing by Peter Rutherford)