The Iron announced the departure of promotion-winning boss Angelo Harrop last week.
Pitt - who joins with the club currently 19th in the National League - was part of Harrop's backroom team until last summer.
Chairman Lee Harding hopes the new appointment can give the club renewed optimism for the remainder of the National League season.
He said: "When we approached Steve about the job he was about to take another role in the game.
"We talked at length about what had happened and were impressed with his honest assessment of where the club are at and his thoughts on turning our season around”
"We all know there is work ahead of us but we know Steve well - It's good to see him back at our club. He played a pivotal role in our progress in the past two seasons and I am confident that we can look forward to the remainder of the season with optimism."
Pitt added: "I'm honoured & privileged to take on the role of first team manager at Braintree Town and will now look to build on the foundations that Angelo has already laid.
We are now all looking forward to the challenge that lays ahead."
The new manager will be joined by Karl Duguid and Phil Coleman who join the club as assistant manager and first team coach respectively.
Interim manager Jason Moseley has left the club despite being offered a new role.