Lambert left Villa Park on Wednesday night after ten games without a win, and having seen his side score just 12 goals in 25 games this season - the lowest total in the Premier League - Lambert leaves with the club stuck in the relegation zone.
Villa are now in danger of being relegated to the Championship, so owner Randy Lerner had to act quickly - and has done just that with the appointment of Sherwood.
The 46-year-old spent the second half of last season in charge of Tottenham Hotspur, and despite winning 50% of his games in charge of the club, he was replaced by Mauricio Pochettino back in May.
Nine months on, and Sherwood is finally back in football, and told the Aston Villa official website of his excitement at taking the job.
"It is a great honour to manage one of the biggest clubs in English football," said Sherwood. "I can't wait to get started and I'm really looking forward to the challenge," he added.
Sherwood will face his former club Spurs on the 11th April, returning to White Hart Lane for the first time since his exit almost a year ago.