American Andre Agassi, eight-times grand slam champion, will continue to coach Djokovic at the grand slams with 39-year-old Stepanek stepping in at other tournaments.
"Radek is one of my very close friends on the tour and I was always impressed with his level of determination, passion and love for the sport," Djokovic said in a statement.
"The fact that he just recently retired speaks volumes of his love for the game.
"He has lot of experience and knowledge, and has played on a high level for many years. I am excited to join our forces and cannot wait to compete again having a new team to back me up."
The 30-year-old Djokovic, who has won 12 grand slam titles, suffered a year-long dip in form before an elbow injury forced him to retire in this year's Wimbledon quarter-finals. The Serb has not played competitively since.
Djokovic lost the world number one ranking to Andy Murray 12 months ago, leading him to cut his coaching ties with German Boris Becker, and after a second-round exit at this year's Australian Open he parted ways with his back-up team in May.
Stepanek, 39, reached a career-high number eight in the world rankings and twice helped the Czech Republic win the Davis Cup before announcing his retirement this month.
He was also looking forward to the challenge of helping Djokovic return to winning ways.
"I'm honoured to be a new member of Novak's team," said Stepanek. "It is a new and exciting challenge for me, which I'm looking forward to, and I believe that as a team we can help Nole (Novak) reach his goals.
"As long-time friends off the tennis court, I believe that our friendship and similar views will translate onto the court as well, and we will share some memorable moments together."
Djokovic, 12th in the world rankings, is due to start his comeback at the Abu Dhabi exhibition event in December.
(Reporting by Zoran Milosavljevic, Additional reporting by Ed Osmond; Editing by Ken Ferris)
