Playing for the club between 2008 and 2010, the club’s former coach now steps up into the top job.
The National League North side won their battle against relegation but Rob Edwards left earlier this month.
He will be assisted by Phil Trainer and an AFC Telford United statement said: “Gavin lives in Telford, has excellent formal qualifications in football and other sports. Heknows the club inside out and is already well known to our supporters and the local community.
“Gavin has a wide network of football contacts both locally and nationally and is widely respected in football circles. This appointment also gives good continuity to build on the much-improved results on the pitch in the latter part of the season.”
Cowan said "It's an absolute honour to be given the role of manager of such a fantastic club and one in which I am very passionate about.
"I'm very optimistic about the club’s future and look forward to serving the club to the best of my abilities as I did when I was a proud captain and first team coach."
Chairman Andy Pryce added: "I am very excited and now looking forward to working with Gavin in preparing for the 2018/19 season. Gavin brings a lot of enthusiasm, knowledge of non-league football and experience of being a part of AFC Telford United."