The one-time Chelsea and Real Madrid star, who played for France in their 2006 World Cup final defeat to Italy, had been out of the game since being sacked as coach of Bastia in November 2014.
He had previously been an assistant coach at Paris Saint-Germain after retiring as a player at the capital club in May 2011.
Group stage qualifiers : Celtic, Monaco face test of Champions League nerves
Monaco said that Makelele's role "will be to assist the vice-president, Vadim Vasilyev, in all sporting matters."
Sources close to the club said Makelele, 42, had agreed "a long-term contract".
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