The ex-Aston Villa boss had been linked with the manager’s job at QPR but has instead moved to the Sky Bet League One side and was presented to the media on Thursday afternoon.
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The 47-year-old played with Robins chairman Lee Power at Norwich and had previously helped send players to the County Ground on loan while at Tottenham.
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Sherwood told a press conference: “I’ve had other offers but it’s an interesting project I’ve had a close eye on for four years since I started loaning players to this club. I’ve had a lot of discussions with a lot of clubs but I’m happy to be sat here.
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“Luke Williams (head coach) is at this club because of me, he was my recommendation. I came across him in a development phase of the game and I recommended him to Lee.
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“He is a very good coach and has a lot more to come. I am coming here to help out. I think it needs tweaking, possibly the style of play at times, sometimes we might need to flip the page a bit.
“I think I can give him a helping hand in that.
“Let’s make sure we stay in the league and start climbing up the table. I’ve got a soft spot for this club. It was a club who developed a lot of Tottenham players who have gone on to big-money moves, Ryan Mason and Alex Pritchard.”
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Williams will remain Swindon’s head coach with Sherwood expecting to be in the stands on match days.
Swindon are fourth bottom in Sky Bet League One having won just one of their last 10 games in all competitions.