Butt replaces Brian McClair, who left United last May to take over as the Scottish Football Association's performance director.
"It's a privilege to take on this role," Butt said, per Mathieson. "As someone who learned his trade in the United youth setup, it's a huge honour now to be given the chance to lead the academy and to instil its values and attitudes to continue to create future generations of Manchester United players."
Manchester United were once famed for their pipeline from the youth squads to the senior team. Butt was a member of the famous class of '92, which included David Beckham, Paul Scholes, Ryan Giggs, Phil Neville and Gary Neville.
More recently, though, United have arguably fallen behind their Manchester rivals in terms of youth development. In September, Manchester City won an under-14 game 9-0, highlighting the growing disparity between the two clubs.
A source spoke to ESPN FC's Andy Mitten about the development in July:
United became complacent. They thought that players would come to United because it was United, with the history of the Busby Babes and the Class of '92 -- or even of getting the best Manchester players in recent years like Daniel Welbeck. The truth is that United have stood still while the rest have caught up and, in the case of City, have gone past United.
Nooruddean Choudry of the Daily Mirror questioned why United left their head youth academy position open for so long:
Butt has a lot of experience with United, playing for the Red Devils from 1992 to 2004 and then joining Giggs' staff when the Welshman replaced David Moyes as the club's interim manager to wrap up the 2013/14 season.
Butt will have a major task ahead, though, as he tries to revamp United's youth academy. Manchester City have spent millions to rebuild their training setup, making structural changes that go beyond coaching.
Even if Butt proves to be an adept talent evaluator and youth coach, he'll need to convince club vice-chairman Ed Woodward to make a concerted effort to supply the support necessary behind the scenes to catch up with City.