Vieira has described the end of his playing career as a sad day but is looking forward to his change of direction.
The 35-year-old Frenchman hung up his boots on Thursday, 18 years after making his debut for Cannes, following a glittering career that has brought him World Cup and European Championship winners' medals as well as seven domestic titles and five FA Cups.
Vieira, who was released by City at the end of last season, has accepted a newly-created position as the club's football development executive and will help nurture young players among other responsibilities.
The former midfielder told City's official website: "It was something I was preparing for in my head and I think it was the right time.
"It's a sad day and a sad moment but overall I've enjoyed the years I've spent in football. Football has brought me a lot.
"I think it will be difficult to find a job that will give me as much satisfaction as football has given me but I just want to give back to society and give back to football what it has given to me. And what a fantastic club for me to do it."
Vieira was City boss Roberto Mancini's first signing when he left Inter Milan to return to the Premier League in January 2010.
He was not a regular starter but made 47 appearances in total, scoring six goals, with his final run-out in a City shirt coming as a late substitute in the FA Cup final victory over Stoke in May.
As well as working in the youth set-up, Vieira will also help to deliver the club's social responsibility programme and get involved on the commercial side.
Explaining his decision to stay at a club where he spent only the very end of his career, Vieira stressed it was the outlook of City's owners and staff that made the difference.
He said: "It's been a fantastic year and a half. I've met people who are determined to make the club progress, who have a vision of football that is similar to mine, and what I love most of all is the hard work that this football club is doing for the community.
"Being part of that is something I wanted to do and that's why I'm really proud and happy to sign a new contract with City.
"I'm delighted to be part of the project ahead. It's a fantastic challenge for me because I want to learn. It's not going to be easy for me because it's a different side of the game that I don't know."
Vieira is planning to take his coaching badges, although he stressed a move into management is not something he is currently planning.
The 35-year-old, meanwhile, is confident City will continue to go from strength to strength after last year's FA Cup triumph and qualification for the Champions League.
"I was really proud to be part of the team last year and I think the team responded really well to the expectation," he added. "The future is looking fantastic because talent has come in and the team is really hungry to win silverware."
Vieira rose to prominence when he joined Arsenal from AC Milan in 1996 and he went on to enjoy great success in nine seasons with the Gunners.
The combative midfielder was part of the 'Invincibles' team that won the Premier League title in 2003-04 without losing a match while he won two other league crowns and four FA Cups.
His final kick for the Gunners was the winning penalty in the 2005 cup final, the last trophy won by Arsenal, before he moved on to Italy.
Four successive Serie A titles followed with Inter Milan before injuries began to limit his appearances and he made the decision to return to England.
On the international stage, the Frenchman was a key part of the team that won the European Championships in 2000 and also made a substitute appearance in France's World Cup final triumph over Brazil two years earlier.
Vieira will report to City's chief football operations officer Brian Marwood, who described him as the "ultimate professional".
Marwood said: "His experience in the world of football is virtually unparalleled and he will be a huge asset to our club as old and young alike benefit from his knowledge.
"His contribution to world football during his time as a player was extraordinary and he will be remembered as one of the greatest players to grace the Premier League."
Meanwhile, defender Jerome Boateng is to leave Eastlands after City agreed an undisclosed fee with Bayern Munich.
The 22-year-old Germany international joined Mancini's side last summer from Hamburg but struggled to make an impact due to a succession of injuries.
The deal will be completed once Boateng, who is currently with City on their pre-season tour of the US, has passed a medical in Bavaria.
Source: Team Talk
Source: Team Talk