Knill had been in charge at Gigg Lane since February 2008
Scunthorpe United have appointed Bury boss Alan Knill as their new manager.
The 46-year-old, his assistant Chris Brass and goalkeeping coach Neil Cutler from Gigg Lane have all signed rolling contracts at Glanford Park.
Scunthorpe general manager David Beeby told BBC Radio Humberside: "Alan was always our number one target and we're glad we have got him."
The Iron, who currently lie 23rd in the Championship, sacked former boss Ian Baraclough on 16 March.
"It's been an interesting process since Ian Baraclough left the club,"
Beeby told the Iron club website.
"In the end, 60 people were interested in taking the role and we narrowed that down to two or three candidates, who we spoke to.
"Having had conversations with Alan, the chairman was adamant he was the right man.
"At one stage we thought we might have to wait until the end of the season but we're delighted to have Alan and his team in place for the remaining games of the season."
Tony Daws has been in caretaker charge of United since Baraclough's departure, and may again take the reins for Saturday's trip to Norwich.
"That's a decision Tony and Alan will have to make," said Beeby.
"The club are happy either way - should it be that Alan says Tony can take charge and he watches from the stands, or if Alan wants to get stuck in straight away and take charge himself."
Knill leaves Gigg Lane after three years in charge with the Shakers sitting fourth in League Two.
said: "The club have reluctantly agreed a compensation package with Scunthorpe to take over the manager's role."
statement on the Bury website
Former Iron defender Knill told BBC Radio Manchester: "It was a very difficult decision, I'm really close with the players and the board and it's one that I haven't taken lightly.
"I had the opportunity to go and manage in the Championship. Even if they came down I feel they are going to be a strong side in League One."
Knill becomes Scunthorpe's third manager of the season following Baraclough and Nigel Adkins,
who took over at Southampton in September.
Meanwhile, Scunthorpe winger Garry Thompson has been ruled out for the rest of the season after undergoing an operation on a persistent groin injury.