Holt has been appointed by the Scottish First Division club as a replacement for Steven Pressley, who recently left to take over English League One outfit Coventry.
His first match in charge will be Saturday's game against Cowdenbeath at the Falkirk Stadium before facing Hibernian in the Scottish Cup encounter on 13 April.
It will be a first managerial role for the 40-year-old, who won 10 caps for Scotland during his playing career, but he left his role as Professional Development Coach at Norwich to take up the Bairns reins.
Holt first made his name in the Scotland with Kilmarnock, after a brief spell at Celtic, and he won the Scottish Cup with the Ayrshire club in 1997.
"It's an exciting move for me. I've worked under some good managers and learned a lot. Their advice was always the same - get your coaching badges and work hard. That has proved to be correct," said Holt.
"As time went on, I felt that after three years good experience as a reserve and youth coach, I was ready to make the move into management.
"It was a case of finding the right club at the right time so I am delighted that I have the opportunity to coach Falkirk at this early stage of my management career."
"I was particularly attracted to the infrastructure and Academy set-up at Falkirk and working with good, young players.
"It may be a cliché but I agree with the sentiments that if you are good enough, then you are old enough."