Appleton had been out of work since being sacked as Charlton boss in January 2024 following a run of 10 league matches without a win.
Despite being unable to halt their slide to League Two, the club have decided to stick with Appleton – who is known for his ability to work with young players – as they plan their return to the fourth tier for the first time in 10 years.
Shrewsbury also confirmed Appleton’s assistant, Richard O’Donnell, will remain in his role ahead of the 2025-2026 season.
“The club has a clear vision for how it wants the team to play. And I hope in the games I’ve had so far, you’ve seen the type of football we are working to introduce,” Appleton added.
“The positive feedback I’ve had from supporters has been fantastic. That identity though doesn’t just happen in a few weeks, we have a long way to go.
“However, both Richard and I are determined to build a team that will really make you proud next season.”
Shrewsbury conclude their League One campaign against fellow relegated side Crawley Town at the Croud Meadow on Saturday (15:00 BST).
