The 51-year-old Edwards, one of the most decorated players in Wigan history before moving to rugby union, will take over at his home-town club on a three-year contract after fulfilling his commitment to Wales at the 2019 World Cup in Japan.
"He is a legendary figure in both codes of rugby as a supremely gifted player and as a highly successful coach," Wigan chairman Ian Lenagan said.
"He is an inspirational figure, a born leader and a winner at everything he has turned his attention to."
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Edwards played as scrumhalf and flyhalf for Wigan from 1983-97, helping the club win 37 major trophies including eight consecutive Challenge Cups.
He retired in 2000 and moved into union as a coach with English club Wasps, leading them to European Cup victory in 2007.
Edwards joined the Wales coaching staff where he has worked under head coach Warren Gatland, helping them win the Six Nations title in 2008, 2012 and 2013. He was part of the British and Irish Lions coaching team on the 2009 tour to South Africa.
Former Papua New Guinea scrumhalf Adrian Lam will lead Wigan in 2019 following the departure of Shaun Wane who is taking a coaching role with the Scotland rugby union team.
(Reporting by Ed Osmond, editing by Pritha Sarkar)
