As part of a backroom shake-up at the League One club, Waddock will work alongside Dons boss Karl Robinson on a day-to-day basis following the departure two weeks ago of assistant manager Mick Harford.
The former Aldershot and Wycombe boss linked up with the Dons on their return to pre-season training on Monday morning.
"The big thing for me is that Gary has been a manager himself in recent times and he has a great ability to encourage, develop and work with young players," Robinson told the club's official website.
"I believe we have one of the best policies in the country at bringing players through the youth system and the success has come through coaching.
"Gary is a great coach who will work with the first team and younger players to help develop us all and help move the football club forward.
"He is a very calm character and a good coach who I am looking forward to working alongside."