The 57-year-old succeeds Colin Calderwood, who played under him during his time as assistant to Glenn Hoddle at Swindon.
Town chairman David Cardoza was very happy with the decision to take on Gorman, a candidate he says was 'head and shoulders' over the other five men on the Sixfields shortlist.
"We're delighted with the appointment," he said.
"He comes to the club very hungry and was really keen to come here and get back to work.
"We did our homework on various people and John's name kept coming up."
Wycombe were unbeaten in 21 games under the Scotsman earlier last season, but the team began to struggle after the the loss of young player Mark Philo in a car crash and the death of Gorman's wife after a long illness.
And Cardoza said: "He did a terrific job at Wycombe and obviously had a couple of well-documented problems there. They should have gone up last year.
"John came very well organised to the interview, he knows our players and he knows the style of play we like to play at this club.
"He was head and shoulders above everyone else."
Cardoza also revealed Gorman, who has been handed a two-year contract, is a wanted man with several other clubs interested in taking him on. But Town have moved first to secure the services of a highly-respected coach.
"He had a couple of other offers out there but he was desperate to come to Northampton," he said.
"John feels he's got a point to prove. He knows this club and he's managed similar-sized clubs to ourselves."