Giggs, 39, signed a one-year extension to his playing contract in March and will combine his new duties with being a member of the first-team squad.
"I'm delighted that Ryan has accepted the chance to become player-coach. His success and ability to adapt his game over a number of years gives him an unrivalled perspective on the modern game," manager David Moyes said in a statement.
"His career is an example to any aspiring young player and I'm sure that both he and the players will benefit from his new role."
Former Welsh international Giggs, who made his senior debut for United in March 1991, is the most decorated player in English soccer with 13 Premier League winner's medals, four FA Cup winner's medals and two Champions League winner's medals among his collection.
"It's a great privilege to be appointed a player-coach. I hope I will be able to bring my experience to bear, having been both a player and part of the Manchester United family for so long," Giggs said.
"It's no secret that I have been taking my (coaching)qualifications and I see this as the first step in my future career. I'm really looking forward to working alongside David and the team."
Photograph: Darren Staples/Reuters