The 44-year-old, who won more than 20 trophies during a playing career at Sporting, Barcelona, Real Madrid and Inter, will work with president Aleksander Ceferin across a variety of technical and legal matters as well as continuing to be an ambassador for the game.
Figo's appointment is part of Ceferin's plan to get more former players involved in the decision-making process over how football is run.
He said: "Luis Figo was a fantastic player who was exemplary in the way he conducted himself both on and off the pitch.
"He is a highly respected figure within the game and I am very pleased he is joining our team. His tremendous football experience will be a very valuable asset to UEFA."
Commenting on his new role, 2000 Ballon d'Or winner Figo said: "I have been lucky to gain a wealth of experience and I believe I can have a positive influence in passing on my knowledge.
"Football is constantly evolving. I am privileged to be involved with UEFA and I would like to thank Aleksander Ceferin for giving me this opportunity.
"I have learned so much from football that I am now really looking forward to giving something back.
"When I started playing football professionally in 1990, I could never have imagined that one day I would have the opportunity to join UEFA and work alongside the president of this organisation and some of the best football minds from around the world."