Whitney was initially promoted to the position on an interim basis after Sean O'Driscoll left the club, but despite leading the Saddlers to eight wins from 14 games, he was unable to guide the club to promotion from League One.
However, despite Walsall missing out in the playoffs, Whitney has been given his first full-time role in management after previously spending time on the backroom staff at the West Midlands outfit.
The 45-year-old told the club's official website: "It's a very proud moment for me and my family. I'm really looking forward to it and I'm excited about continuing the work we started last season. I've been at the club for over 13 years now and I'm extremely proud that Walsall have given me my first permanent position in football management.
"It's about finishing the job and creating a sense of unity, not just in the squad but together with the fans and everyone connected with the club so we can all push on together.
"I have a great working relationship with Jeff [Bonser] who has always been fair and honest with me and they're attributes I share and will look to take into management. I'll have the same energy, enthusiasm and commitment but the biggest thing for me is to enjoy it.
"I want to make sure we develop the ethos that we've created over last five years and hopefully take it to the next level."
Walsall have spent the last nine years in the third tier of English football but Whitney will hope that the club can build on their third-place finish in League One during the recent campaign.