Hendon, 43, returns to the Matchroom Stadium after spending five years as a player with the O’s from 1993 to 1997 – he also had a loan spell with the club before joining them permanently from Tottenham.
He retired from playing in 2009 with Barnet, who he went on to manage before a brief stint with Dover Athletic, but his most recent job was as first-team coach under Sam Allardyce at West Ham.
Hendon replaces Fabio Liverani, who was removed from the role earlier this month after failing to keep the club in League One.
“Orient is a club that means a great deal to me – I hope that fans will remember the commitment I showed as a player, and know they can expect the same dedication from me as head coach,” Hendon said on the club’s offical website.
“I’ve got a lot of experience of the lower leagues, having played at every level during my career and worked in League Two as player/manager, but having spent a few years working in the Premier League I have learnt a huge amount that will stand me in good stead for this new challenge.
“I hope to be able to bring some stability to the club and help rebuild after the disappointment of last season.
“Promotion is the priority, but reconnecting with the fans is also important. Having met the President, I was impressed with his own long-term plans for the club, and I can’t wait to get started.”