The former England midfielder, who spent 12 seasons at Old Trafford and made almost 400 appearances, will work with the club's reserve team.
The 37-year-old, who was part of the famous class of 1992 alongside the likes of Gary Neville, Paul Scholes and David Beckham, made 387 appearances for the senior team before moving to Newcastle in 2004. Butt ended his playing career in 2011 after a brief spell in China and subsequently obtained his coaching badges, and he is set to earn his stripes with United reserve coach Warren Joyce before looking for a top job of his own.
"Nicky is with the reserves," United boss Sir Alex Ferguson told the club's official website. "He's completed his badges and is just getting a bit of experience with us, so there's every chance of [him going into management].
"He's had a few opportunities to take on jobs but wanted just a wee bit of a chance to revisit the training ground again to get himself back into sync, which we're happy to do, because he was a fantastic servant to us. I don't know what his long-term future is but, in the meantime, he's helping out with the reserves."
In addition to his glittering career at Old Trafford, during which he won a UEFA Champions League trophy and six Premier League medals, Butt also made 39 appearances for England, and United youngster Tom Thorpe welcomed his input.
"It's brilliant," the defender enthused, "Especially when a player with a lot of experience comes back and has done it from an early age. He was at the club for quite a while and has gone through to the first team. It's great for him to pass on his experience and different ways of playing with different styles."