Former Reading and Ipswich striker Noel Hunt has joined Southend United on a one-year deal.
Sheffield United striker Billy Sharp has twice turned down the chance to play for city rivals Sheffield Wednesday.
The former Rotherham, Bury and Scunthorpe boss will work with assistant Shaun Taylor, who has been managing the Gulls for the last six games while manager Martin Ling has been absent on sick leave.
Knill faces a tough task at Plainmoor as he inherits a side who have lost their last five matches, the most recent a defeat at Aldershot last night.
Torquay stand just five points clear of the npower League Two relegation zone ahead of the visit of Port Vale on Saturday.
"Alan was suggested to us by some people in the football industry," chairman Simon Baker told the club's official website.
"We had drawn up a shortlist and we checked up on Alan with people he had worked with, and they all gave him a glowing reference.
"We met him at Aldershot yesterday and we are delighted he has decided to come in and help us. He comes across as a very agreeable man but there is an edge of steel in him, which is what we need."
Ling has been away from the club since the day his side recorded their last victory, a 1-0 win at Exeter on January 28, and Baker revealed the latest update on the former Leyton Orient manager's condition.
"The last I heard from Mrs Ling was that Martin is making progress and we will see how it all pans out," Baker added.
"We will cross that bridge when it comes but our focus at the moment is between now and April 27, when the season comes to an end."