Pareja played 11 seasons in Colombia, helping Deportivo Cali to a national crown in 1996 before joining Major League Soccer in 1998, netting 13 goals over eight seasons in Dallas before retiring in 2005.
Pareja served as an assistant coach in Dallas until being named to coach MLS side Colorado Rapids after the 2011 season. In two years under Pareja, the Rapids won 25 of 68 matches, losing 30 and drawing 13.
"We are thrilled to welcome Oscar back to FC Dallas as head coach," club chairman Clark Hunt said. "In addition to his stellar career as a player in our league, Oscar has an outstanding track record of success as a coach at every level of MLS.
"Oscar's experience, teaching ability, personal integrity and passion for our club make him the ideal choice to lead FC Dallas in 2014 and beyond."