The 42-year-old Irishman will work alongside Scot Paul Lambert at Villa Park, combining the role with his post as Republic of Ireland boss Martin O'Neill's number two.
The move had been mooted last month after Keane spoke to Celtic about the opportunity to succeed Neil Lennon as manager, but ultimately decided to take himself out of the Parkhead hotseat's running.
Lambert's long-term assistant Ian Culverhouse and football operations manager Gary Karsa were suspended and then sacked by Villa owner Randy Lerner for unspecified disciplinary reasons towards the end of last season, leaving the permanent position alongside Lambert vacant.
"I am delighted to be joining Aston Villa and I look forward to what promises to be an exciting challenge," Keane said.
"I am grateful to both Villa and the Football Association of Ireland for making this happen and I would like also to thank Martin O'Neill.
"I am relishing the prospect of linking up with Paul Lambert and combining both roles to the full advantage of both Villa and Ireland."
Lambert welcomed the opportunity to work alongside the former Sunderland and Ipswich manager.
He said: "Roy has a great knowledge of football, on the coaching side as well, and he'll be a great asset and a big help to everybody here at Aston Villa Football Club.
"I'm really looking forward to working with him and I'm delighted that he's here.
"As a player, he was one of the most accomplished in the history of the Barclays Premier League and he's brought that experience gained over many years into his career in coaching and management. The players will love working with him.
"Although we never played together, we competed against one another and he's someone for whom I have a lot of time and respect. He has worked under some great managers, some of the most successful in the game, and he'll be a great help to myself as well.
"Roy brought Sunderland up out of the Championship and into the Premier League, he gained further experience at Ipswich - where we were close rivals while I was manager at Norwich - and he's now working at international level as assistant manager with the Republic of Ireland.
"All of that experience and knowledge along with the qualities he has as a longstanding, leading professional in the game means he will bring a lot to the table. We're delighted to have him here."
Keane will begin working in his new role ahead of the players returning for pre-season training on Monday.
After leaving Portman Road in January 2011, he returned to the game in November last year when O'Neill offered him the opportunity to return to the international fold with the Republic.
Keane's presence within the Ireland camp has raised his profile once again and O'Neill admitted at the height of the speculation at the start of June that the former Manchester United skipper would inevitably be courted by other potential employers.
ONeill said: This is a good arrangement for us that allows Roy to remain in position as my assistant manager. Since he started in November, Roy has been excellent with the players and I have no doubt that he will bring all of the positive attributes he has shown here to the role he takes on at Aston Villa with Paul Lambert.