The former Gretna and Morton boss - who managed the Warriors between 2010-12 - was in caretaker charge for Saturday's 1-0 home win over Brechin City in Ladbrokes League 2, following the departure of Colin McMenamin early last week.
Chairman Iain McMenemey told the club website: “Whilst there were a number of good candidates considered, Davie is the right person for this role at Stenhousemuir FC.
“His affinity for the club, his enthusiasm for the challenge, and the approach that he wanted to take gave us the encouragement we needed and we were delighted to offer him the job.”
