Camacho will be paid 800,000 euros a year which will be shared amongst his assistants.
The 61-year-old former Spanish international defender takes over from Portugal's Jorge Costa and has signed a two-year deal, a statement from the office of president Ali Bongo Ondimba said.
Gabon kick off the Cup of Nations against Guinea Bissau in Libreville on January 14.
According to media reports, Camacho will be paid 800,000 euros a year which will be shared amongst his assistants.
However, the Gabonese press also expressed surprise at the appointment of a man who has been out of the coaching business since 2013 and does not speak French.