Following Mowbray's departure from Celtic on 25 March 2010, Lennon was appointed caretaker manager for the remainder of the 2009–10 season. He appointed former teammate Johan Mjällby as his assistant. Celtic won all of their remaining league games under Lennon, including wins over Kilmarnock, Hibernian, and Rangers, but lost 2–0 to First Division side Ross County in the semi-final of the Scottish Cup. In the aftermath of that defeat, Lennon spoke frankly about the Celtic players and their performances over the course of the season. He said that they had lacked "hunger and desire" and that whether he was installed as manager or not, he would be recommending a significant clear-out of players to the board.
Lennon was appointed manager of Celtic on a full-time basis on 9 June 2010. He retained Mjällby as his assistant, as well as former Celtic teammate Alan Thompson and former Leicester City teammate Garry Parker as first-team coaches
On 28 July, in his first competitive game as full-time manager, Celtic lost 3–0 away to Braga in the UEFA Champions League. Celtic won their first eight league matches under Lennon, although controversy erupted in their 2–1 win away at Dundee United on 17 October 2010. Celtic were awarded a penalty kick in the second half, but the decision was then rescinded by referee Dougie McDonald. McDonald explained after the match that he over-ruled the penalty award on the advice of the assistant referee. Lennon reluctantly accepted McDonald's explanation, commenting "I suppose you have to put it down to another honest mistake by the referee." It was, however, later revealed that McDonald had lied in his explanation over the penalty award and the referee subsequently resigned several weeks later having received a warning from the Scottish Football Association after failing to properly explain his overturning of the penalty award. Further referring controversy ensued the following week when Celtic lost their unbeaten run in the league, losing 3–1 at home against Rangers. The Ibrox club's third goal came as a result of penalty awarded when Rangers' Kirk Broadfoot fell to the ground under a challenge from Celtic's Daniel Majstorović. Broadfoot appeared to have dived, and television footage showed that the referee had his back to the play when the challenge occurred, only turning in time to see Broadfoot fall to the ground. Lennon stated afterwards that he felt the referee "got a couple of decisions wrong", and added regarding the penalty, "I'm not sure that he saw it so I don't know why he's given it. He's got a lot of questions to answer". In November, Lennon led Celtic to a 9–0 win over Aberdeen, a record win in the Scottish Premier League and Aberdeen's heaviest ever defeat. Celtic lost their next game 2–0 away against Hearts, with Celtic's Joe Ledley sent off for the first time in his career for a "strong" challenge on Ian Black. Celtic were later denied a penalty award in the second half, and shortly afterwards Lennon was sent to the stand by the referee. Lennon defended Ledley after the match, describing referee Craig Thomson's decision as "ridiculous". Lennon was later given a six match touchline ban for excessive misconduct as a result of the incident in the Hearts' game, although it was later reduced to four matches after appeal. He was given another four match touchline ban by the SFA following an altercation with Rangers assistant manager Ally McCoist after a Scottish Cup match in March 2011.