His last role was as joint manager at Farsley Celtic, helping them to promotion to the EVO-STIK League Premier Division in 2017.
He was also at Farsley between 2000 and 2008, alongside Lee Sinnott, when the club earned promotion up to the National League.
Between those two spells, he spent six years at Bradford Park Avenue, winning the EVO-STIK League Premier Division play-offs, and also reaching the FA Cup first round proper on two occasions.
Deacey said: "I've been out of the game for a short period of time due to personal reasons, however Scarborough has huge potential to climb the pyramid and this was a job that attracted me back to football.
“I have a few ideas of how to change things around in the short term with the existing squad, however playing positive football on a great surface and operating with an open mind will be instilled across all my teams.”
Deacey takes over from Steve Kittrick, sacked last month after the Seadogs fell out of the play-off places.
Club chairman, Trevor Bull, added: "John met all of the criteria we were looking for, including having had previous success at our level and above.
“John comes in at a late part of the season, in anticipation of building for next season and finishing 2018/19 as high up the table as possible. We hope all of our supporters give John a warm welcome to the club.”
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