Gala turn to Terim
Romanian coach Lucescu quit the Turkish giants last week as his contract had expired, despite leading them to the championship this season.
Terim has been out of work since being sacked at Milan last November and Galatasaray are delighted to have him back at the helm at The Ali Sami Yen.
"Fatih Terim is our new coach," said vice-president Ali Durust. "All further details will be revealed at a press conference on Tuesday.
"We are very proud of what Lucescu achieved as coach of Galatasaray because he is a real gentleman and we thank him for everything he has done for the club.
"Mircea Lucescu told us that he had accomplished his mission and he has left his job at Galatasaray.
"He earned the gratitude of us all for his self-sacrificing work and we thank him."
Former Turkish national coach Terim is a big fans favourite at Galatasaray having guided them to unparalled success during his first stint in charge.
Terim led Gala to four successive championships between 1997 and 2000 and brought them their first major European trophy with victory over Arsenal in the 2000 Uefa Cup final.
Lucescu is now being linked with a possible move to Turkish rivals Besiktas as a possible replacement for Christoph Daum.
The German coach quit Besiktas at the weekend and Lucescu is thought to be at the top of their list of replacements.
Meanwhile, Terim has confirmed that he has moved to sign midfielder Umit Davala from his old club Milan.
Terim brought the skilful ace to Milan with him from Galatasaray, but he has failed to establish himself at The Giuseppe Meazza.
Fenerbahce are keen to bring him back to Turkey, but the Turkish international has turned down the chance to join the Istanbul outfit, opening the door for a return to Gala.
"I promised to Terim I can't play for Fenerbahce," said Umit.
"Umit Davala will sign on Thursday for Galatasaray," said Terim. "He is a present from Galliani and Milan to me.
"We will loan him for one year and next year we will talk again."