He left to join the coaching staff at Coventry City in July 2002 and was appointed Notts County boss in January 2004 but could not prevent the Magpies from being relegated to the bottom tier of the Football League and was sacked after just 10 months in charge.
Time in charge of Alfreton Town followed but Mills returned to Tamworth in January 2007 and guided the Lambs back to what is now the Blue Square Bet Premier in 2009.
A statement on the Tamworth website said: "Gary leaves the Lambs with the club's best wishes and everyone at the club would like to place on record their thanks for the hard work that he has done in establishing the club as a Football Conference National side.
"Everyone knows what Tamworth means to Gary, he has been involved close on a total of near on 10 years in two spells. It is a sad day for him as he has made many friends at the club and in the town."
Mills arrives at Bootham Crescent with York lying 16th in the top tier of non-league football, three places and three points behind Tamworth. His first game in charge will be Saturday's visit of Bath.
"On behalf of the board, I would like to thank our supporters for their patience during the managerial appointment process," added McGill.
"We did not want to rush into a hasty, panic appointment following the surprise departure of Martin Foyle and were keen to find the right manager to take us forward."
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