Phelan, who served as assistant to Alex Ferguson during his final five years in charge at Old Trafford, will begin work alongside Hull boss Steve Bruce ahead of Saturday's trip to Manchester City.
A former team-mate of Bruce's during his United days, Phelan most recently worked as assistant manager at Norwich City before a two-month spell was ended by mutual consent in January.
Bruce has been without an assistant since Steve Agnew left the KC Stadium to join Middlesbrough in December.
"I'm extremely pleased to be at this football club," Phelan told Hull’s official website. "I want to work hard and channel all of my energy into helping the staff, the players and everybody associated with the club.
"I'm looking forward to working with Steve and hopefully I can bring with me some of the things I have learnt over the years to help us improve."
Bruce added: "I'm delighted to welcome Mike to the club. Mike brings a wealth of experience to the position having worked with Sir Alex at Manchester United for many years.
"I've known Mike for a long time and he is a good person who will undoubtedly add something different at the training ground."
Hull are third-bottom of the Premier League having lost their past three matches.
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