The 36-year-old will lead the side in League 2 next season after taking over from Stuart Malcolm, who left the club last month.
A statement on the Forfar website said: “All involved behind the scenes at Station Park have been impressed with the manner in which Gary has steadied the ship in his caretaker role over the last four weeks.
"Despite the fact we were unable to avoid the drop down a division, the unanimous decision of the Board after the interview process was completed was that Gary was the man to take the reins with immediate effect.
"He is currently engaged in undertaking his SFA coaching badges and will announce his backroom team shortly."
