Dundas, who famously scored 53 goals in one season in the 97/98 campaign, helped the Grove to a League title, a League Cup and a famous run to the FA Vase Semi-Final in his tenure with the club.
“It’s surreal with everything going on at the moment but I’m absolutely delighted to be Kidsgrove Athletic manager," he said.
“I started here in 1992 with Pete Ward so to be back as the manager is fantastic and I have a great rapport with the fans.
“I like to play fast and attractive football and my teams score goals, and I want to be competing at the right end of the table.”
Vice-chairman Ian Cooper added: "The club are extremely pleased with Scott's appointment and given Scott's history with the club I'm sure it will be popular with our supporters as well.
"With all clubs facing uncertain times, Scott will be given time to build the team he wants, to play the football he wants to play."
Dundas will be accompanied by Ant Buckle who has previously managed the Grove.