Goater, who scored thirty two goals in thirty six games for Bermuda, will take charge of his new side on Saturday when they host Sutton Coldfield Town.
Previous manager Paul Holland agreed to step down on Friday morning, allowing the club to name Goater as his successor.
The move comes with the Robins sat second from bottom in the league, with only nineteen points from their twenty nine games.
Going into Saturday's home game against the Royals they are twelve points from safety.
Holland was named as Ilkston manager just weeks after the end of last season, stepping up from his role as the club's academy director.
The club's struggles began before the season got underway, with the Evo-Stik Northern Premier League revoking their license to play in the division due to financial issues.
That meant that the Robins' first four league fixtures were postponed, before they finally got their season underway with a game against Ashton United on 27th August.
The Robins have won only five of their nineteen league fixtures and Tuesday's 0-0 home draw with Coalville Town was Holland's last game in charge.
Ilkeston confirmed the decision in a statement released on their website on Friday morning.
It read "Paul Holland and Ilkeston FC have agreed that he is to step down as Robins manager with immediate effect. After talking at length with the Chairman, Both parties feel a new face and an injection of fresh ideas may be able to help the Club in it’s battle for NPL Premier league survival.
It has been a difficult time for the Club and although Holland has worked hard to get to this point, a fresh approach is needed.
Everyone at the club wish to thank him for his efforts and wish him well in the future.
A further Statement on a replacement will be announced in due course"
Goater began his professional career with Rotherham United, with seventy goals in his two hundred and nine appearances for the Millers.
A prolific spell at Bristol City earned him a move to Manchester City, where he played a key role in two consecutive promotions taking the club from Division Two into the Premier League.
Goater become a cult hero during his time at the club, something helped by the fact that his 100th goal for City was the winner in a derby against local rivals Manchester United.
Having made two hundred and twelve appearances for City, scoring one hundred and three goals, Goater went on to play for Reading, Coventry City and Southend United, before ending his playing career in Bermuda with Bermuda Hogges and North Village Rams.
In his time with the Rams he started his coaching career, working with the club's youth set-up.
In August 2015, Goater was named as assistant manager of Evo-Stik Northern Premier League First Division North club New Mills, although he stayed with the club for just over a month, resigning alongside manager Andy Fearn.
Now he will step into his first full managerial role as he looks to help Ilkeston in the remaining ten weeks of the season.
Article: Mark Carruthers (@marknldaily)
Images: Reuters Media (Action Images)