McDaniels, 34, replaces Pat Shurmur, who was hired last week to be the Cleveland Browns' head coach.
McDaniels was fined $50,000 by the NFL after a videographer violated league rules by videotaping a San Francisco 49ers practice in London in October.
The Rams made a six-victory improvement this past season under Spagnuolo, who will enter his third season as head coach.
McDaniels was with the Patriots from 2001 to 2008. He was a personnel assistant on the '01 team that beat the Rams in the Super Bowl. New England won two more Super Bowls and totaled four AFC championships in McDaniels' eight seasons with the franchise, the last three with him as offensive coordinator.
Copyright 2011 by The Associated Press