A five-time champion as a player with the Lakers, Fisher coached the Knicks from 2014-16.
WNBA outfit the Sparks made the announcement on Wednesday as ex-Los Angeles Lakers guard Fisher, 44, prepares to return to coaching.
"I am thrilled to name Derek Fisher our next head coach", said Penny Toler, the Sparks' executive vice president and general manager, in a statement released by the team.
The team's previous coach, Brian Agler, resigned Friday after four seasons with Los Angeles.
Fisher, 44, helped the Los Angeles Lakers win five National Basketball Association titles during his 18-season playing career and served as president of the players' union.
Fisher will inherit a team that includes two-time WNBA MVP Candace Parker. He went 17-65 in 2014-15 as a rookie head coach and was sacked the following season with the Knicks sporting a 23-31 record. Brian Agler resigned as the team's head coach last week, leaving a vacancy that will be filled by the former National Basketball Association player and head coach. "I'm certain Derek will not only build on the Sparks championship culture, but also play an instrumental role in all the work we do in the Los Angeles community". The Knicks were 17-65 in his first season, the worst record in franchise history.