The 52-year-old Baumgart is set to take charge of the team from Jan. 2 for the rest of their Bundesliga campaign. Union parted ways with coach Bo Svensson and members of his staff on Friday after a poor run of form.
Union have been winless for more than two months and, having lost five of their last seven Bundesliga games, are in 12th place on 17 points from 15 games.
Baumgart, a former Hansa Rostock and VfL Wolfsburg forward, netted 22 goals during his two seasons at Union from 2002 to 2004. He managed second division side FC Koln from 2021 to 2023 and was at Hamburger SV before being dismissed last month.
"I'm very much looking forward to returning to the Bundesliga and to Union," Baumgart said in a statement.
"It's certainly an advantage to know the club and many people here well. We don't have much time to prepare and will work intensively with the players to be prepared for the tasks ahead of us."
Union visit Heidenheim in the Bundesliga on 11th January.