"Peter has a wealth of experience after a lifetime in the dressing-room and dug-out which made him the stand-out candidate to progress the club on the pitch," said Pilgrims chairman Sir Roy Gardner.
"We said all along that we were seeking a man with proven experience who could help us realise our aspirations and ambitions - we want to get back to the Championship and, after that, move on.
"Peter fits that criteria perfectly.
"He is an international manager and player, and, domestically, he has achieved success in both spheres at the highest echelon.
"He also knows how to mix it outside the Premiership, winning lower league titles on the pitch and from the sidelines.
"He is well connected, commands respect, and has a depth of knowledge of the game that few of his peers can match."