He'll join Mitchell van der Gaag in the coaching team for the incoming United boss ahead of the new season.
McClaren made his name in the game with a hugely successful spell as Sir Alex Ferguson's assistant in which he helped the Red Devils to a historic treble in 1999.
In 2001 he left to become a manager in his own right with Middlesbrough where he won the club's first major trophy in their 128-year history, before taking the team all the way to the UEFA Cup final in 2006.
McClaren then spent two years as England manager, before enjoying success with Dutch side FC Twente where he won the Eredivisie title in his first full season in charge, with Ten Hag as his assistant.
Since then, the 61-year-old has spent time at Newcastle, Nottingham Forest, Queens Park Rangers and Derby, but now returns to Old Trafford for what fans hope will be an exciting new era under Ten Hag.
McClaren told Man United's official website: "I thought I worked hard until I met Erik.
"His great strength lies not just in his attention to detail and organisation.
"He has a clear philosophy of how he wants to play football; the environment he wants to create."
While many will be excited by McClaren's role in the new era at United, talkSPORT host Simon Jordan believes his appointment will be a big step up from their time together in the Netherlands.
"There might be a reason for his [McClaren's] involvement. You're bringing a Dutch manager into the football club, he's [McClaren] managed in Holland, understands the mentality, also understands Manchester United - once upon a time," he said.
"This is not the Manchester United that Steve McClaren was fortunate enough to be involved in, this is a different Manchester United.
"I don't know what they base this current recruitment of Steve McClaren on - FC Twente are not Manchester United."