The 54-year-old native of Sandusky, OH has been out of the coaching ranks since the conclusion of the 2008 season.
Since 2009, he has been a color commentator for ESPN's Monday Night Football.
Gruden, now the color commentator on ESPN's "Monday Night Football", will be officially introduced as Oakland's new head coach on Tuesday, according to multiple reports.
Gruden, now a Monday Night Football analyst, coached the Raiders from 1998 to 2001, winning AFC West titles in his last two seasons.
Gruden spent four seasons as coach in Oakland from 1998-2001.
Current Los Angeles Rams quarterback coach Greg Olson will be Oakland's offensive coordinator, while former Cincinnati Bengals defensive coordinator Paul Guenther will serve in the same capacity under Gruden.
Steve Corkran of RaidersSnakePit.com first reported the news.
The NFL on Friday said the Raiders have complied with the Rooney Rule in their coaching search.
In 2002, Gruden was traded to Tampa Bay, where he coached the Buccaneers to a Super Bowl victory over the Raiders the following season. "I know they've gone through their process of interviewing candidates and until they're done I won't know".
A second person with knowledge of the team's plans said one of the minority candidates who interviewed was tight ends coach Bobby Johnson.
Other teams have also done it, with one of the most recent notable coaching hires being Joe Gibbs in Washington.
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