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The former Scotland midfielder was already on the coaching staff at East End Park and will be assisted by former Pars defender Greg Shields.
Chairman Ross McArthur told the club website: “Stevie has been first-team coach/reserve team manager since the start of the season so his appointment also provides much-needed stability and continuity through his existing knowledge of our club and players.
“Stevie has impressed everyone with his energy, preparation and professionalism. He is really hungry to be successful and relishes the opportunity to take our club forward.”
Dunfermline are seventh in the Ladbrokes Championship table as they prepare to face Dundee United at Tannadice on Saturday.
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