Sparrow – who was on the 1995 and '97 All Ireland winning Clare teams – has already tasted club success as a manager with Limerick sides Adare and Kilmallock.
The Clarecastle native will now seek to turn round the fortunes of Toomevara who won the last of their 22 county titles in 2008.
O'Loughlin will act as joint manager alongside Philip Shanahan.
