Bilic, 54, was relieved of his duties after fewer than six months in charge of the Hornets, with former Sheffield United boss Wilder taking over immediately.
Watford, who have won just three matches since Christmas, are ninth in the Championship.
Wilder’s arrival continues the remarkable churn of managers at Watford under the ownership of the Pozzo family over the past decade.
The 55-year-old becomes the 18th full-time appointment since July 2012, and he is charged with ensuring the club return to the Premier League.
“We are all ambitious to succeed this season, so something new is needed quickly while the opportunity of promotion is still real,” said Ben Manga, the club’s technical director.
“With the January transfer window over, to change coach is the only option available to re-energise for the final games ahead.”
Former West Ham and West Brom boss Bilic was appointed only in September after Rob Edwards was sacked following just 11 games in charge.
Bilic, who has also managed his native Croatia during his two-decade management career, led West Brom to the top flight in 2020.
But he served less than six months of his 18-month deal at Vicarage Road, with his final match a goalless home draw against Preston last weekend.
The Hornets are pleased to confirm the appointment of Chris Wilder as Head Coach on a contract until the end of this season.
Welcome to Watford, Chris! 👋
— Watford Football Club (@WatfordFC) March 7, 2023
Wilder oversaw Sheffield United’s rise from League One to the Premier League before securing a ninth-placed finish in the Blades’ first season back in the top flight.
Wilder left the club in March 2021 following a poor run of results, and took over at Middlesbrough the following November only to be given his marching orders a year later.
His first game in charge will be at QPR on Saturday.
The Hornets are 26 points behind leaders Burnley and four points adrift of Norwich, who occupy the final play-off position.