Penn took interim charge following the departure of Jimmy Shan in mid-February.
Harriers- currently sitting in sixteenth-place in Vanarama National League North- picked up seven points from four matches with the club legend in temporary charge.
Impressive victories at Farsley Celtic and Southport as well as a goalless draw away to high-flying Gateshead were among the results which earned the 34-year-old a two-year deal in permanent charge of the Aggborough outfit.
On the appointment, interim Chief Executive Neil Male said: “Both Richard Lane and I want stability for the club.
"Having had more than five managers in 18 months, there’s a need to put in foundations and build something powerful for the future – Jimmy (O'Connor, the newly appointed Assistant Manager) and Russ have our full backing to do that.
“I’ve personally seen Russ develop and grow in stature during his spell as Interim Manager and, with the support of a vital figure in Jimmy, I know they are the people who can bring success back to Kidderminster Harriers with their extensive experience and contacts at this level.”