Parkin was appointed to Baraclough's backroom staff on Tuesday, watching the Iron's second string draw with Lincoln City after agreeing the move.
His most recent job in football was coaching at Hull City, but has been on gardening leave since the end of last season when the Tigers lost faith with manager Phil Brown.
He has spent the last six months negotiating compensation for terminating his contract.
He played alongside Baraclough at Mansfield Town, where he made his move into management. He has also had time in charge of Rochdale and Barnsley.
"I've always regarded Steve very highly. He has vast experience, not only as a manager but also in coaching - having spent the last three years at Hull City and experiencing life in the Premier League - and he will be a great addition to the club," said Baraclough, speaking to Scunthorpe's official website.
"He will be great for me and for the rest of the lads. He is a fantastic coach and will get on well with the players. He's a lively character and a great communicator.
"I wanted to bring him into the set-up from the day I was made caretaker manager and I'm delighted to make him my first signing."