The 62-year-old made 11 first-team league appearances for the Iron between 1980 and 1985, playing at centre-back.
Although a talented footballer, Botham is best known for his achievements in cricket, scoring over 7,000 runs and taking more than 500 wickets for England.
Botham is Scunthorpe's first president since John Godfrey, who died in 2015.
Speaking to the club website, Iron chairman Peter Swann said: "We had a table at the ball to mark his retirement from fundraising walks on Monday. I thought it would be great if we could offer him the opportunity to become Scunthorpe United President. He accepted it without hesitation.
"It's a couple of seasons since we lost John Godfrey. We spoke as a board and thought Sir Ian would make an ideal ambassador for us.
"Sir Ian's other work means he's out of the country a lot, but he comes to watch the Iron when he can and also regularly watches on a feed when away. He's always very vocal in his support for the club. He has a great affinity with the Iron and will be a fantastic ambassador for Scunthorpe United."
As well as his new role with Scunthorpe, Botham is also the chairman of County Championship Division Two side Durham.