Gilardino signed a contract until the end of this season, with a club option to extend for a further two seasons.
The former World Cup winner with Italy spent three seasons at Parma where his career took off, scoring 50 goals in 96 Serie A appearances.
Gilardino, who also played with AC Milan and Fiorentina, has managed Siena, Genoa and Pisa.
He took charge of promoted side Pisa last season, but was sacked after one win in 23 league games.
Cuesta left Parma after discussions with the club, who said that 'the conditions no longer existed between the parties to continue the professional relationship, particularly concerning the development of the sporting project'.
Parma have one win in their opening five league games this season and Gilardino's first game in charge will be an away trip to face champions Inter Milan.