The 49-year-old's return to the Pirelli Stadium had been anticipated after Jimmy Floyd Hasselbaink's departure to QPR on Friday
Clough first took the reins at Burton as player-boss aged 32 in October 1998 and went on to become their longest serving manager, leaving a little over 10 years later for Derby, with the Brewers well on course to attain promotion from the Conference
Burton are currently top of the League One standings by two points after 20 games
Chairman Ben Robinson said: "We have enjoyed a great start to the season under Jimmy and his assistant David Oldfield and Nigel Clough is the ideal man to continue that work.
"He has a tremendous track record in football as both a player and a manager and during a 10-year spell at Eton Park, and then the Pirelli Stadium, has already shown his tremendous passion and commitment for Burton Albion.
"We are delighted to welcome him back."
Clough was in charge of Derby for nearly five years before being sacked after a poor start to the 2013-14 season
He took over at Sheffield United less than a month after his departure from the Rams but parted company with the Blades after they were beaten in last season's League One play-off semi-finals by Swindon.
Clough had been linked with the vacant position at League One rivals Chesterfield but he is delighted to make his return to Burton.
He said: "It's wonderful to be back at Burton Albion again, working with the chairman Ben Robinson and his staff, who make this club so special.
"We're looking forward to trying to maintain the remarkable success the club is enjoying."
Source : PA
Source: PA