Stuart Pearce will take over as Nottingham Forest manager on a two-year contract on 1 July.
The ex-Forest captain initially turned down the job for family reasons but had a change of heart and will replace caretaker-boss Gary Brazil next season.
"I had so much on of a personal nature that it wasn't the right time," said 51-year-old Pearce.
"But when they asked if I would take it from the summer, I jumped at the chance. Everything seems right."
Former England and Forest left-back Pearce, nicknamed "Psycho" for his combative playing style, joined the club from Coventry City in 1985 and left after a brief spell as caretaker-manager in 1997.
He will take over from Brazil, who has been in charge for the last two games following the sacking of former boss Billy Davies.
Pearce said the lure of returning to the City Ground as boss was "massive" and said his career would "not be fulfilled" if he did not get the job of managing the Reds.
"It was probably more of a pull than any club in the country," Pearce said. "The pride and the passion of what I do comes before any financial gain.
"The honour of coming back into this club is massive but what I have done here as a player is irrelevant."
Forest are seventh in the Championship, two points off the play-off places with seven games of the regular season left.
Reds chairman and owner Fawaz Al Hasawi owner said: "I am really happy to have Stuart as boss. He is a very good manager, he has a good CV and I wish him all the best with us. I am really happy as chairman and owner and for the fans because they like him.
"We are looking forward to him starting in the summer. I was waiting to pick the right manager, and Stuart is the right manager."
Pearce also played for Newcastle United, West Ham and Manchester City after leaving Forest.
After a two-year spell as Manchester City manager from 2005, he took over as England Under-21 boss in 2007, a post he held until June 2013, and led the Team GB football side at the 2012 Olympics.