The 46-year-old started his playing career at Manchester United, before making his name at Preston North End, making over 100 appearances, also featuring for West Bromwich Albion until injury cut shot his career.
Turning to coaching and management, Appleton had spells in charge of West Bromwich Albion and Portsmouth, before taking charge of Blackpool in 2012, leaving after two months to head to Blackburn Rovers,.
He left in the summer though and returns to Bloomfield Road after Neil Critchley left to join Premier League side Aston Villa as assistant head coach earlier this month.
Tangerines owner Simon Sadler said: “I am very much looking forward to seeing what he can achieve during his second stint with us.
"All of the prospective head coaches were strong candidates and we spent several hours with each to get to know them better.
"Whilst success cannot be guaranteed, Ben, Brett, John and I are convinced that, after a thorough recruitment process, he’s the right man for us at this point in our journey.
"After debating their individual pros and cons, we were unanimous in our decision to choose Michael Appleton.”
Appleton himself added: “I am absolutely delighted to be here. To be able to come back to the Club, with where the Club is at during this moment in time, after two really successful seasons, I can’t wait to get started.
“When I spoke to Simon, to Ben, John and Brett, you could clearly feel the energy in the room, and I think they felt that from me as well.
"This club now feels like the right club at the right time.
“The fans will certainly have seen glimpses of what I tried to do in my days at Lincoln.
"I want to play aggressive, forward-thinking football and we have certain things that we want from the players when we’re playing, dependent on opposition clearly.
"We just want to be exciting and get people off their seats.”