The former prime minister said a new form of federal home rule is needed to offer an alternative to the division between Holyrood and Westminster.
Mr Brown gave his speech at the Festival Of Ideas in Kirkcaldy, Fife, against the backdrop of a constitutional stand-off between the UK and Scottish governments over the calling of a second independence referendum.
Loading article content
He has already pledged to join forces with Scottish Labour leader Kezia Dugdale to campaign for a People's Constitutional Convention to look at how power is distributed across the nations and regions of the UK.
Mr Brown, an architect of the 2014 "vow" promising Holyrood more powers in the event of a No vote to independence, proposed a range of controls be passed to the Scottish Parliament after Brexit.
These include the setting of VAT rates, the power to sign international treaties, and controls over agriculture, fisheries, environmental regulation, employment and energy.
He said: "You can call it a more federalistic option, you can call it in the more traditional way Scottish home rule, you can call it federal home rule. I'm calling it the third option, a Scottish patriotic way forward."
He added: "I think it will become clear over the next few months that the third option, that Scotland has more powers as part of a federal agreement with the UK, a Scottish home rule that gives us the powers to make decisions in important areas but does not deprive us of the co-operation we need, will be the best option."
Mr Brown said he believes it can become the "unifying option for our country."
The former PM also called for the repatriation to Scotland of £800 million of money now spent by the European Union, and proposed the Bank of England becomes the Bank of England, Scotland, Wales and Northern Ireland with fully staffed representation in Scotland ''to reinforce the fact that the pound is for everyone''.
He said changes are needed as we cannot continue with the status quo, but that independence is not the answer.
Mr Brown said: "The world has changed but not the way the SNP want it to be. The world has changed and we have to face up to post-Brexit realities. It doesn't make the case for independence stronger, it makes it weaker."
He called for "popular sovereignty" which, rather than state sovereignty, gives people the opportunity to make decisions in an inter-connected world.
Scottish Liberal Democrat peer Jeremy Purvis said: "By rejecting the siren sounds of nationalism and independence we believe there is an optimistic and modern alternative.
"The SNP are wrong in their answer to Brexit. We should not be erecting a barrier that will put us out of both the EU single market and the UK single market.
"Our belief in the UK and the EU gives us a unique position in Scotland that no other party has."
Patrick Harvie MSP, the Scottish Greens' co-convener, said: "For these proposals to become a reality, it would require the improbable prospect of Scottish Labour getting in to power at Holyrood in tandem with Corbyn's Labour winning a general election and a sudden, unexpected thirst for federalism in the rest of the UK.
"Importantly though, and compared with independence, this plan would do nothing to maintain Scotland's ties with Europe, or protect us from the isolated Britain planned by the Tories, which will cost Scotland 80,000 jobs and a £2,000 drop in average wages."