Challen returns to the club he represented as a player in 2005 to take up his second managerial role after leaving Sprowston Athletic.
Challen, younger brother of Wroxham captain Graham, will be supported by Laurence York who will take a back seat after two consecutive seasons at the helm due to new work commitments.
New Director of Football Development Steve Eastaugh said: "Kaine has all the qualities needed to help develop young players and will install the winning mentally needed to progress.
"He will of learnt a lot last season and will be in a better position for it.
"I'm excited by his appointment and the enthusiasm he will bring to the role.
"It is yet another piece of the huge development jigsaw we are beginning to assemble with more announcements that will benefit the top local talent."