Sheridan, Latics boss between 2006 and 2009, has returned to the club as David Dunn's successor after an agreement was reached with Newport.
The Welsh side, in League Two, granted Oldham permission to speak with their manager on Tuesday and a deal has now been concluded.
Latics chairman Simon Corney is delighted to have Sheridan back at Boundary Park, telling the club's official website: " John has always been high up on my list whenever we have appointed managers
"If you look at his record, he got us into the play-offs when he was here and he has won the Johnstone's Paint Trophy and promotion with Chesterfield, plus he took Plymouth into the play-offs last season
"Wherever he has been he has done really well
It was time to make a change and we feel we've got the right man here to make a difference, get the crowd going, get the players going and keep us in League One.
"I would also like to take this opportunity to add my thanks to Newport County who have dealt with this situation in a professional manner."
Oldham sacked Dunn this week just four months into his tenure after he secured only three wins
Sheridan replaced Terry Butcher as Newport boss in October and has led the Exiles to five victories from his 17 matches in charge
The 51-year-old made more than 150 appearances for Oldham during his playing career
Assistant manager Warren Feeney and first-team coach Mike Flynn will be in charge of Newport for Saturday's trip to York
Source : PA
Source: PA