The 42-year-old replaces Dennis Booth, who left Deepdale this summer, and is his first job since being sacked by the Foxes in April.
He told the club's official website: "I am delighted that Paul and Preston North End are giving me the opportunity to get back in the game so quickly.
"After speaking to Paul I know he is ambitious and forward-thinking so that will be a big attraction.
"I know all about Preston, I know the potential here, they have done well over recent seasons and the club seems to be moving forward all the time and not just on the pitch, but off it as well."