Taylor, 32, was forced to retire from the game six years ago after he was diagnosed with a rare heart condition, and joined the ECB as a selector in 2018 after short-term coaching roles with Northamptonshire and in the England pathway.
He spent three years working alongside Ed Smith and another year as head scout after Smith's national selector role was axed in 2021.
Taylor spent four seasons playing for Leicestershire before moving to Nottinghamshire, winning the Friends Life T20 in 2011, and will now work under his former captain Paul Nixon, who has been the club's head coach since late 2017.
"I'm delighted to be back with Leicestershire," Taylor said. "I've got so many fond memories here and I can't wait to add to those.
"A real passion of mine is helping people and coaching is something where I can do that. I've got a wide range of different experiences and hopefully some of that knowledge can transfer to the players.
"There are some hugely talented players here at Leicestershire, and I can't think of a better place to come and work to try and make a difference. I want to help take the club forward in any way I can."
Leicestershire had a disastrous red-ball season in 2022, picking up the County Championship's wooden spoon after a winless campaign, but reached the knockout stages of the Royal London Cup and would have progressed to the quarter-finals of the T20 Blast but for a points deduction.