Keates made over 150 league appearances for Wrexham and captained the club to an FA Trophy win in 2013.
The 38-year-old, along with Joey Jones and Andy Davies, had been in temporary charge of the National League club after Gary Mills was sacked on 13 October.
"Dean is a man with an excellent pedigree in football," the club said.
"He is someone who knows all about Wrexham AFC and the fans expectations and someone who has a real passion for the club.
"We believe has the knowledge, the drive and the determination to bring lasting success to the Club as we build for a successful future."
His first game in charge as permanent manager will be the home National League game against Barrow on Tuesday.
Keates, who started his career with hometown club Walsall, also played for Hull City, Kidderminster Harriers, Lincoln City, Peterborough United and Wycombe Wanderers.
He joined Wrexham in the summer of 2010 and after five seasons at the Racecourse left in 2015 before a spell with Rhyl in the Welsh Premier League and more recently played at Rushall.
Wrexham have appointed former midfielder Dean Keates as their new manager on an 18-month contract.