The 56-year-old former Bristol Rovers, QPR, Plymouth, Leicester, Blackpool, Crystal Palace and Millwall boss, replaces Michael Jolley, who parted company with the Mariners in November.
A statement on the club's official website read: "Grimsby Town Football Club are delighted to announce the appointment of Ian Holloway as first team manager.
"With over 600 appearances as a player and taking charge of over 950 games over a 20-plus-year managerial career, Ian will bring invaluable experience to the table for the Mariners."
Holloway, who has guided both Blackpool and Crystal Palace into the Premier League during his career to date, is to acquire shares in the club and join the board as part of his commitment to a long-term project, and will be assisted by Anthony Limbrick following his spell as interim manager.
Majority shareholder John Fenty said: "Ian will soon achieve the rare personal accomplishment of 1,000 games in professional league management. Holloway will be joining the likes of Sir Alex Ferguson, Arsene Wenger, Sir Bobby Robson, Graham Taylor, Brian Clough, Lawrie McMenemy, Alan Buckley and Lenny Lawrence in the history books with this milestone.
"The board believes securing someone of Ian's experience and reputation demonstrates our commitment to bring success back to Blundell Park. We believe his track record of achieving success at unfashionable, under-performing clubs makes him an attractive long-term appointment."
Holloway told iFollow Mariners: "It's an honour, to be honest with you, and a big decision. I made that with the real boss, to be honest, my wife Kim.
"The kids are older, got their own children now. We feel there'll be enough time to do Granny and Granpy duty as well as work on a challenge and try to get hold of a wonderful old club like this and try to move it forward.
"I'm really, really excited about it - I can't tell you how excited I am, to be honest. I feel like a kid in a sweetshop. It's fantastic. I've been made to feel so welcome.
"It's been going on for a few weeks, but I'm absolutely delighted to be here now."
Grimsby currently lie in 21st place in the table and are without a win in 15 games in all competitions ahead of the New Year's Day clash with Salford.
Holloway has been out of football since his second spell at QPR came to a close in May 2018.
