The 35-year-old will join the club on June 2, after signing a three-year contract with the third-tier club.
"I’m very excited by the challenge and the project at Fleetwood Town," he told the club's website.
“It’s a club I’ve known for a long time, and a chairman I already have a very good relationship with.
“My first job in management was always going to be a big decision for me and I’m delighted with the opportunity ahead, I’m joining a club with big ambitions. I’m looking forward to getting started on June 2nd."
The ex-midfielder has been absent from the game since he left Burnley in 2017.
Fleetwood hairman Andy Pilley added: “This is a huge appointment for Fleetwood Town Football Club and one I’m very excited about.
“Joey not only brings a host of experience and profile, but I also feel he has the potential to become one of the best in the new generation of coaches"
“He’s someone I’ve known for a number of years and I’m convinced he’s ready to make the step into management, and that he will be a huge success.
“Joey will be able to build-on the fantastic work done by John Sheridan during the last couple of months, one he deserves huge credit for.
“John joined us on a short term arrangement with the aim of keeping us in League One and I’m delighted he’s been able to do that.
“Today’s news signals a new chapter for Fleetwood Town which starts on June 2nd, and one which we are all excited about.”