The 49-year-old former Crawley and Solihull Moors boss is back at Aggborough a decade after leaving.
Due to an overseas commitment, Yates will take charge for the first time when Kidderminster face Chester on February 9.
The new boss has 14 matches to try and get the club back into the National League North promotion picture with Harriers sitting ninth.
“We are where we are, and I can’t do anything about the last 28 games, but I’ve come into a club that’s two points outside the play-offs," he told the club's website.
“Teams have got a game in hand perhaps, but we’ve got 14 games to try and, ultimately, get in amongst it.
“There are a lot of good players here and it is a club close to my heart – I want to come in and put my stamp on it for the remainder of the season and we’ll see what happens.
“This is a proper football club and hopefully we can finish the season properly."
Kiddy lost 1-0 at home to Alfreton on Saturday but are just two points shy of the play-off places.
Owner Colin Gordon has been in charge since the club and manager Neil MacFarlane had parted company on January 7.
Jimmy O’Connor and Russ Penn, who assisted since the change was made, will continue to work Yates in the new set up, Harries have announced.
Yates masterminded Solihull's revival last season before leaving to take the job at National League champions Macclesfield Town in the summer.