Mullery led the club during the glory days of the late 1970s and early 1980s, clinching promotion from Division Three to the top flight in three seasons.
He also enjoyed a hugely successful playing career in which he captained Fulham, Tottenham and England, and had a second spell at the Goldstone Ground in the mid 1980s.
Chairman Tony Bloom commented, "Alan has played a huge part in our club's journey and he is a legendary figure in the Albion's history. He guided the club into the First Division for the only time in our history in 1979, and helped build one of the greatest-ever Albion sides.
"He has a long-standing connection with the Albion, one which has never gone away. He had a very close relationship with my grandfather Harry, during his first spell at the club, and I am absolutely thrilled to welcome him back to the club in this new role."
Mullery added, "It is a wonderful opportunity. Everything is in place, the stadium is magnificent, the people who are on the board, and the chairman is absolutely unbelievable. Everything about the club is good.
"When I was offered the job and I accepted, the hairs on the back of my neck went funny. My wife looked at me and I was quite emotional to be honest. I am really pleased that the board offered me the job. I am absolutely delighted."
His new role will be based around matchdays at the American Express Community Stadium, where he will become a familiar face and voice in the club's 1901 Club lounges and occasionally on the pitch at half-time.
He will also work with Albion in the Community in and around Sussex, help mentor our young academy prospects and write a regular match programme column.
As a seasoned media pundit, with many stories to tell from his distinguished career, Mullery will also host club functions, attend supporters' group meetings and host his own special tour of the Amex.