Sydney confirmed on Wednesday that Talay, 47, will replace Steve Corica with immediate effect.
"I am pleased to announce Ufuk Talay as head coach of Sydney FC's A-League Men's squad," Sydney FC chairman Scott Barlow said in a statement.
"Ufuk is a talented and dynamic coach who will bring his positive, attacking style of football to Sydney FC.
"He has proven he is an astute tactician with excellent player management skills, and he has the ability to bring the best out of our young squad.
"As a former Sydney FC player and coach, Ufuk is well aware of the high expectations and targets we have at the club, and we believe he is the right man to achieve them."
Talay will take charge of this weekend's trip to league leaders Adelaide United with his contract due to expire at the end of the 2024-25 season.
Previously a player with Sydney, Talay has been working as part of Graham Arnold's Socceroos setup since leaving Wellington earlier this year.