Former Ivory Coast defender Toure, who played for Celtic last season after spells with Arsenal, Manchester City and Liverpool, joins as Technical Assistant.
"This is great news for Celtic that we are able to bring a man of Kolo's experience into our coaching team," manager Brendan Rodgers said on the club's website.
"In everything he does, he is quite simply a fantastic example to anyone. He has worked at the top of the game for so many years and he has all the qualities which any player of any age should aspire to."
The 36-year-old, who made nine league appearances for Celtic last season, said he was pleased to be back in Glasgow.
"I couldn't be happier to be back at this great club," he said. "This is a new chapter in my career, a new beginning. The football is over now. I can officially say I am retired from playing and now I am fully concentrating on coaching."
Toure also took on coaching responsibilities with Ivory Coast this year, having earned 120 caps.
(Reporting by Martyn Herman, editing by Ed Osmond)
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