Kompany ended an eleven-year association with Manchester City last summer to become player-manager at his boyhood club but had to relinquish his dugout role on matchdays, with Anderlecht later appointing Franky Vercauteren to direct affairs from the touchline.
Anderlecht have now parted company with Vercauteren and Kompany has signed a four-year contract to become the club’s new manager.
Kompany played 15 times in the Belgium top flight last season, scoring once, as Anderlecht finished the campaign in eighth position.
"I want to fully commit to my role as a coach and need 100 per cent of my time and focus for it," Kompany told the Anderlecht club website.
"That's why I'm quitting as a football player. Our ambition and our hunger remains the same.
"I want to stay with the club for at least four seasons and prove that Anderlecht can play a modern style of football, with results. I want to thank Franky (co-manager Frank Vercauteren) for all his help."
Anderlecht chief executive Karel Van Eetvelt added: "As everybody knows, this was always the plan.
"It might have come a little sooner than expected, but Vincent committing himself for another four seasons to the club is great news for the club, our supporters and our players."
Kompany won four Premier League titles, four League cups and two FA Cups during his time at Manchester City.
