Richard Hill departed the team on Saturday by “mutual consent” after the south coast team had not won in nine games following a 3-0 loss to Ebbsfleet.
Over the course of a 22-year career, 47-year-old Davis made 687 appearances, including 301 games for the Saints.
Before going to Wimbledon in 1999, he played more than 100 matches at Luton throughout the start of his career.
Davis played with the Dons for 147 games before spending ten years at Southampton. He also had stints at Ipswich Town and Sunderland.
Prior to joining Southampton, Davis was a coach at Lincoln City.
Davis’ assistant manager is Danny Butterfield, who was most previously Lincoln’s assistant head coach.