The 54-year-old has been handed a deal until the end of season and has been tasked with guiding Chester out of the relegation zone.
It is less than two weeks since his shock sacking from Harriers.
But after agreeing a severance package with Kidderminster he was free to find another job.
He said: "There were a lot of enquiries since I left Kiddy and I have left all that with my agent who called me today to say there had been a concrete offer on the table which I am very happy to accept.
"We have obviously got a big job on because it's a tough league, but with everyone pushing in the right direction we will give it our best shot and hopefully we can keep Chester in the Conference."
He made an immediate impact as Chester defeated Barnet 2-1.