Holden, 36, will work alongside fellow coaches Neil Cutler and John Ward.
He was first given a coaching role at Walsall by then boss Dean Smith before leaving in November 2014 to become first-team coach at Oldham.
After a spell as caretaker manager last season, Holden left the club in January when manager David Dunn was sacked.
"It's been an interesting time since I was last here," said Holden. "I went to Oldham as first-team coach and quickly became interim manager and then I was assistant manager up to when I left.
"It was a fantastic experience for a young coach like myself and I'm coming back much more experienced. But to say I'm happy to be back here would be an understatement. It's simply about coming in and trying to add whatever I can to help us get over the line."
Whitney said: "As soon as this position became available, I earmarked Dean as someone who could possibly help me out. The most important thing for me, whether they're a player or a staff member, is that they fit in with the group - and this is a great appointment for us."
After three straight wins since Whitney took over in the wake of Sean O'Driscoll's sacking, Walsall currently lie third in League One, level on points with second-placed Wigan Athletic, going into the Easter weekend, when the Saddlers are inactive because of international calls.
Saturday's scheduled trip to fourth-placed Gillingham was postponed (until Tuesday, 12 April) as a result of Romaine Sawyers (St Kitts & Nevis), Neil Etheridge (Philippines) and Jason Demetriou (Cyprus) all being called up.
Demetriou was due to be back to allow the home game with Shrewsbury Town to go ahead on Easter Monday. But the subsequent call-up for striker Tom Bradshaw by Wales meant that the Shrewsbury game was called off too.
It is the second time this season that Bradshaw's meeting with his old club has been postponed as a result of him receiving an international call. The derby game with Shrewsbury is now set for Tuesday, 26 April.
League One promotion hopefuls Walsall have brought back their former defender Dean Holden to join the club's coaching team under interim boss Jon Whitney.