Neil Warnock's men opened the scoring through Rob Hulse but on-loan Nottingham Forest striker Joe Garner equalised in the 28th minute and put the Iron ahead three minutes after the break.
Midfielder Michael O'Connor crashed home a superb third in the 58th minute and Mark Duffy added a late fourth as Knill's men bounced back in style from last week's 6-0 thumping at Norwich and climbed off the foot of the table.
Scunthorpe went close in the fifth minute when on-loan Leeds striker Ramon Nunez engineered the space to hit a 20-yard shot which Paddy Kenny saved comfortably.
In the fifth minute, Rangers fashioned their first opening when Bradley Orr crossed dangerously and Hulse connected to hit a 12-yard shot which flew narrowly over the crossbar.
Rangers midfielder Hogan Ephraim then saw an 18-yard shot flash narrowly wide but the visitors soon opened the scoring when Hulse struck in the seventh minute.
Wayne Routledge found space to deliver a teasing cross from the right flank and Hulse showed his predatory instinct with a header into the bottom right-hand corner from 12 yards.
Two minutes later, Rangers almost doubled their advantage when Routledge drilled an 18-yard shot which drew a fine parried save from Joe Murphy.
The Iron goalkeeper excelled himself again moments later when he pushed away Tommy Smith's free-kick and the Iron were left breathing a sigh of relief in the 10th minute when Alejandro Faurlin fired over from 12 yards out.
In the 25th minute, Routledge had a shot parried by Murphy but Scunthorpe gradually steadied themselves and drew level in the 28th minute.
Rangers defender Clint Hill fouled Garner and O'Connor whipped in a fine free-kick from the right flank.
Garner rose to meet the ball and plant a firm header past Kenny into the net from 12 yards out.
Scunthorpe began to build up a head of steam and O'Connor went close with a 20-yard free-kick and Nunez also threatened from distance.
Rangers found themselves on the ropes as the interval approached and three minutes after the restart they fell behind when Garner grabbed his second.
The Forest man showed a clinical touch to sweep the ball home right-footed with a neat finish from six yards out.
Ephraim then volleyed wide for Rangers with a 25-yard shot but Scunthorpe edged further ahead in the 58th minute when O'Connor lashed home a superb 30-yard strike into the top left-hand corner.
Smith then sought to find an instant response for the hosts but his tame 12-yard shot was comfortably saved by Murphy.
Yet Scunthorpe constantly asked questions of the Rangers defence and deservedly grabbed their fourth in the 79th minute when Duffy met Chris Dagnall's cross and fired a right-foot shot into the net from 12 yards out.