The former Goodison Park striker had been working as assistant manager to the Everton Under-18 side as part of his role with the club's Academy.
But Ferguson is now relishing his new role with the first-team squad, which will begin on Monday:
Everyone knows what this club and the supporters mean to me and if the manager thinks I can make a contribution then I am delighted to do so.
It's a very proud moment for me and it's a dream come true.
I am really looking forward to my new role with the first-team and can't wait to work alongside the manager, Graeme Jones and the rest of the lads.
I must thank Kevin Sheedy and all the coaches at the Academy for the help and support they've given me since I returned to Everton.
There's a lot to play for this season, it's exciting times and I am made up to be a part of it.
Ferguson joined the Blues on an initial loan deal from Glasgow Rangers in October 1994, before making the move permanent under Joe Royle in a £4 million switch from Ibrox.
The former Scotland international also served a prison sentence while with Everton for head-butting Raith Rovers defender John McStay during his time with Rangers (via The Independent).
But Ferguson went on to cement his reputation with Everton supporters, notably with his display in outshining then-world-record-signing Alan Shearer's debut for Newcastle United on the opening day of the 1996-97 Premier League season.
Ferguson joined Newcastle in November 1998 in a move which Everton's manager at the time, Walter Smith, had no knowledge of (BBC Sport), but he returned to Goodison Park in August 2000.
The Scot retired from playing at the end of the 2005-06 campaign with Everton, and he returned to the club's academy on a voluntary basis in October 2011.