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.

The Tunisian electoral commission had asked for the delay, saying it needed more time to prepare a credible vote.
The country's interim Prime Minister Beji Caid Essebsi said the vote will now take place on 23 October 2011.
Critics say that elections should go ahead soon to bring an end to the instability following the overthrow of President Zine al-Abidine Ben Ali.
But many recently formed political parties say they need more time to prepare.
Last month, the electoral commission sought a delay, saying that it needed more time to organise the vote, including putting three million Tunisians into the electoral database and ensuring hundreds of thousands of others get valid identity cards.
Reputation
"There are parties who did not agree, even the government did not agree, but our mission is to hold free and transparent elections," said Mr Essebsi, adding that Tunisia and its revolution "have a reputation that we must protect".
The date was the result of several weeks of negotiations between political groups to establish a date for the first election since the popular uprising which brought about the fall of Mr Ben Ali, forced to cede power on 14 January after 23 years in power.
Mr Essebsi said that Tunisia's fledgling experiment with democracy - which triggered a series of pro-democracy revolts across the Middle East - was being closely observed.
"The world is watching us. Tunisia today has an extraordinary image because its revolution happened peacefully, without weapons," he said, adding: "The wind of freedom has blown through other countries... but we will be the only ones to succeed in putting into place a democratic government."
October's vote is for a constituent assembly to write a new constitution that would pave the way for legislative and presidential elections.
The new assembly will decide whether the country gets a presidential or parliamentary system, and whether a separation of religion and state becomes law.
Under Mr Ben Ali's 23-year rule, a single party - now officially dissolved - controlled the country and opposition parties in parliament were largely symbolic.
Since his overthrow a total of some 81 new parties have been officially registered.
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.
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Tunisia's interim government has said elections, due to be held in July, will be postponed for three months.