The 54-year-old has been handed a two year deal with the remit to get the club back into the National League.
A caretaker at Chesterfield last season, he will be assisted by midfielder Russ Penn.
Well-respected Pemberton has a rich history in youth football but says the time is right to step into a senior role.
The Harriers have been looking for a new manager since Mark Yates left back in April.
He came in for the final four months of the season after the club parted company with Neil MacFarlane in January.
Kidderminster ended last season in tenth place in the National League North - five points shy of the play-off places.