Neville played for boyhood club United from 1995 to 2005 before switching to Everton and retired at the end of the 2012-13 season. He made 59 appearances for England between 1996 and 2007.
The 38-year-old was an assistant coach at United under both David Moyes, currently in charge at Valencia's La Liga rivals Real Sociedad, and interim replacement Ryan Giggs.
"Valencia CF are pleased to announce the appointment of Phil Neville as assistant manager of the first team, joining the coaching staff headed by Nuno Espirito Santo," the club said on their website (www.valenciacf.com).
Following last year's takeover by Singapore billionaire Peter Lim, Valencia are ambitious to return to the top in Spain and Europe after a period of instability marked by financial troubles and disappointment on the pitch.
They finished fourth in La Liga in 2014-15, securing a place in qualifying for the Champions League, the competition in which they were losing finalists in 2000 and 2001.
They ended their latest La Liga campaign on 77 points, the same number they amassed when they last won the Spanish league title in 2004.
"Phil Neville has great experience at the top level of competition, but above all he has knowledge and values that fit perfectly with our team and our club," Nuno said on Valencia's website.
"He has always been a team player and our philosophy is based on teamwork. We are, and want to continue to be, a group. I am convinced that he is going to help us a lot."
(Reporting by Iain Rogers, editing by Alan Baldwin)
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