Henry has signed a deal until June 2021 and said on Monaco's website: "I am very happy to come back to Monaco and extremely determined to meet the challenges ahead".
Henry has been confirmed as the coach of former Ligue 1 champions AS Monaco, following the departure of Leonardo Jardim.
Moreover, his two-year spell as assistant head coach to Roberto Martinez with the Belgium national team has provided the ideal coaching groundwork.
He started his career at Monaco in 1994 under former Arsenal boss Arsene Wenger, before joining Juventus in 1999.
Jardim was sacked earlier this week after Monaco suffered a fifth defeat in nine Ligue 1 games. He went on to enjoy a stellar club career with Arsenal where he won two FA Cups and two league titles and became the club's record goalscorer with 228 goals in all competitions.
"In the first place, I thank AS Monaco for giving me the opportunity to coach the team of this club so special to me", his statement read.
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Henry's first game in charge will be against Strasbourg next Saturday.
He scored 51 goals in 123 appearances for France, winning not only the 1998 World Cup but also Euro 2000.
Should Emery spend a similar duration of time at Arsenal, by the time the Spaniard's job is done at the Emirates, Henry may just have gained the level of experience and the coaching pedigree required to make the step up to the club that he still feels passionately for.
Henry will now turn his attention to forming his coaching staff and it has been announced he will be joined by Joao Tralhao, the Benfica Under-23 coach, and Patrick Kwame Ampadu, coach at the Arsenal academy.
'Thierry is both aware of the task ahead and eager to start his new job.