The Lancashire club have confirmed that the former Blackpool, Leeds and Huddersfield boss has agreed to take charge following last week's departure of Graham Westley
Grayson was sacked by Huddersfield Town in January, despite having overseen their promotion to the Championship last season via the League One play-offs.
But he is now back in the English third tier having been chosen to replace Graham Westley at North End with the club currently 17th, eight points clear of relegation.
Grayson will be joined at the club by coach Glynn Snodin, who has previously worked alongside him during his time at both Leeds and Huddersfield.
Caretaker manager John Dryer, who took over temporarily following Westley's departure last week, will remain with the club.