Bury have agreed a compensation package with Scunthorpe over the departure of Shakers boss Alan Knill to take over at the npower Championship strugglers.
Knill spent four years of his playing career with the Iron between 1993 and 1997.
Assistant manager Chris Brass and goalkeeping coach Neil Cutler have also left Gigg Lane and the Shakers said in a statement: "It is with deep regret that we announce Alan Knill is no longer manager of Bury Football Club.
"The club have reluctantly agreed a compensation package with Scunthorpe United for Alan to take over the manager's role with immediate effect.
"The club will announce who will be taking over as caretaker manager in due course."