Berhalter took over from Dave Sarachan having been with Major League Soccer side Columbus Crew previously.
The 45-year-old made 44 appearances for the US and played 21 games for the Eagles between 2001 and 2002, scoring once against Bradford City with a well-drilled free-kick.
He was the first Palace player to feature in a World Cup tournament whilst playing for the Eagles. During the 2002 World Cup, Berhalter had a goal controversially cleared off the line against Germany as his effort struck the hand of a German defender.
Returning that summer, Berhalter eventually left SE25 for German side Energie Cottbus in September.
He will now be looking to take his national side to the 2022 World Cup, having not qualified for Russia 2018.