Fletcher came through the youth ranks of Manchester United and spent two decades at the club.
The former Scotland captain won five Premier League titles, one FA Cup, one UEFA Champions League among numerous other honours in his time at Old Trafford.
Fletcher spent time with West Bromwich Albion and Stoke City during the latter stages of his career before returning to Manchester United as an under-16 coach last October.
The 37-year-old was however elevated from his previous position and added to Ole Gunnar Solskjaer’s coaching staff in January but he has enjoyed another swift promotion.
John Murtough, who has been at the club for the last seven years, has also been named as the new football director.
Commenting on the appointment, Fletcher said: "It is great to be back with the club and I am delighted to be taking on this new role. We are moving in the right direction and I am looking forward to continuing to work with Ole and his coaching team, and now with John as the football director, to help bring young players through and further develop the football side of the club.
"It’s fantastic to see that all the staff here are driving Manchester United forward towards a new era of success."
Fletcher won 80 caps for the Scotland national team, scoring five goals.
