The Scot scored 72 goals in 273 appearances for the Goodison Park outfit in two stints as a player, and has been working with the club's under-18s since returning to the club in 2011.
|10/1||Everton are 10/1 with bet365 to finish in the top four|
"Duncan Ferguson is developing into a really exciting coach," he told the club's official website. "He has been working with the first team on a part-time basis. We need his influence in the first-team environment.
"He brings real direction to the youngsters. When you want a bit of advice, I think Duncan is going to be the guy to give that sort of direction.
"The players respect Duncan and I think he can become someone very special within our set-up. He's got the desire and hard work needed.
"Duncan has been working really hard to go into all the specifics of coaching and the way we play and now he is ready to make an impact. He can achieve as much as he wants in that area."
Ferguson declared his pride at being given the role, adding: "It¹s 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, [assistant] Graeme Jones and the rest of the lads."
Everton travel to top-of-the-table Chelsea on Saturday, and Martinez believes the match could prove to be a litmus test for whether his side can achieve a top-four finish.
"When you get match experience against teams competing in the Champions League, you get a good idea where we are," he continued. "From the outside, Chelsea looks a team capable of competing for the title.
"If we end the season with a points tally that earns a top-four position then we will welcome that."