The former Panathinaikos, Inter and Fulham midfielder is his country's record cap-holder with 139 career appearances.
Karagounis announced his retirement from international duty following the World Cup in Brazil earlier this year.
However, he will now make his return to the fold, having been awarded a two-year contract by the Hellenic Football Federation.
The specifics of Karagounis' new role are yet to be decided, but he will provide valuable experience to Ranieri, who took over from Fernando Santos in July.
Ranieri's first game in charge ended in a 1-0 Euro 2016 qualifying home defeat to Romania earlier this month.
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