Ira Winderman of the South Florida Sun Sentinel reported the news.
Butler started his NBA career as a first-round pick of the Heat in the 2002 NBA draft.
The UConn product made stops with the Los Angeles Lakers, Washington Wizards, Dallas Mavericks, Los Angeles Clippers, Milwaukee Bucks, Oklahoma City Thunder, Detroit Pistons and Sacramento Kings during a nomadic 14-year playing career.
He formally retired in 2018 and has worked on ESPN and Fox Sports as a basketball analyst.
Butler won an NBA championship with the Mavs in 2011 and earned back-to-back All-Star selections with the Wizards in 2007 and 2008.
In 2013, he discussed the transition from impact role player to leader in the latter stages of his career while with the Bucks.
"I hang my hat on being a professional on and off the court," Butler told reporters. "I pride myself on trying to get better, even at this stage of my career. I'm trying to help the younger guys. I think it's a great opportunity for all of us."
Now 40, the Wisconsin native will return to Miami as the organization looks to build on an appearance in the 2020 NBA Finals, where it lost to LeBron James, Anthony Davis and the Lakers.
"If they can add another piece with what they have developing, they will be a force to be reckoned with for years to come," Butler said on NBA TV after the Finals (via the Miami Herald). "You bring back this team with more pieces, this team is going to be a problem."
Butler will replace Dan Craig, who left Miami to join the Clippers' staff in October, and join a group of Spoelstra assistants that includes Malik Allen and Chris Quinn.