Coyle was a firm favourite with fans during his time as a striker for Bolton in the 1990s, scoring 23 goals over the course of two-and-a-half seasons and helping the club earn promotion to the Premier League in the 1994/95 campaign.
Gartside shortlisted the Scot for the manager's job at the Reebok Stadium before appointing Gary Megson in 2007 and subsequently recommended him to Burnley, where he took over the following month.
A little over two years down the line, with Coyle having led the Clarets into the top flight for the first time in 33 years, there was no doubt in Gartside's mind who he wanted at the helm after sacking Megson.
"Owen was our number one target and we are naturally delighted that he has returned to the football club as manager," Gartside told Bolton's website, bwfc.co.uk.
"He was an inspirational player who leads by example and a great motivator and, on behalf of everyone at Bolton Wanderers, I would like to say welcome home."
Coyle, who has reportedly signed a two-and-a-half-year contract, has never hidden his affection for Bolton and, prior to Burnley's visit to the Reebok Stadium on Boxing Day, he admitted Wanderers were "a club very close to my heart", adding: "I had a lot of fantastic times at Bolton and loved every minute."
The 43-year-old enjoyed a strong relationship with fans and players at Turf Moor but, after speaking to Gartside, Coyle made his desire to return to Bolton clear in a meeting with the Burnley board last week.
Bolton have endured a difficult couple of years under Megson, who was unpopular with supporters and left with the team struggling in the relegation zone, and his predecessor Sammy Lee but Coyle is relishing the chance to come in and lift the mood.
"I'm absolutely delighted to be back at Bolton Wanderers," Coyle said.
"I look forward to the opportunity of bringing the good times back to the club for everyone."