The 54-year-old has left his job as assistant first-team coach at Barnet to join the National League club on a rolling contract.
Waddock led the Shots into the Football League in 2008 with a then record points total of 101 and left in 2009.
The ex-Republic of Ireland international replaces Barry Smith, who left the Shots at the end of this season after not renewing his contract.
Waddock previously spent two years in charge at the Recreation Ground, before taking over at Wycombe in 2009. He later had spells at Oxford United and Portsmouth.
His first managerial job was at QPR, where he previously made his name as a player.
"It's a situation I never thought I'd be in, but I'm delighted to be here," Waddock told Aldershot's website.
"I've missed the people here and I've missed the supporters. The atmosphere they created at home games was amazing and I loved that.
"We have to be able to give them something to cheer about and we're going to try our best to get this place rocking again."
Gary Waddock has returned to Aldershot Town for a second spell as manager.