Andrews, who captained the club to League Two and Johnstone’s Paint Trophy glory in 2008 before returning to Milton Keynes in February, will work alongside manager Karl Robinson and head of coaching Richie Barker as the Dons embark on their first ever Sky Bet Championship campaign.
The 34-year-old told the club’s official website: “I absolutely love my new role and this is the perfect place for me to start learning.
“I think everybody knows how much I want to be here. It’s where I want to ply my trade and it’s a joy to work with everyone, in particular the young lads who I hope to have a real effect on in terms of coaching and analysis.
“I’m just obsessed with football. I never switch off for a second – even when I’m watching a game at home on the sofa, I’m analysing it.
“I’m just looking to evolve as I go along and it certainly won’t be through a lack of effort if I don’t to get to where I want to go to.”
Andrews made his name at the Dons with his impressive performances from the middle of the park in a first spell at the club between 2006 and 2008.
He returned last season for a loan spell, following stints at Blackburn, West Brom and Bolton.
Andrews began his career at Wolves and has also played for Hull, as well as representing the Republic of Ireland at international level.