Calderwood, 46, is reunited with manager Chris Hughton for a third time and joins a backroom team at St Andrew's which also includes first-team coach Paul Trollope.
The news comes as no surprise after Calderwood was in the stands to watch Blues' last-gasp 2-1 victory at home to Burnley on Tuesday night.
Blues tried to prize Calderwood away from his role as manager at Hibernian in the summer, seeing a compensation offer in the region of £300,000 turned down by the Clydesdale Bank Premier League club.
However, his sacking at Easter Road on November 6 following just over a year in charge paved the way for him to link back up with Hughton, with a severance package finally understood to have been agreed with Hibs.
The pair first worked together during Calderwood's playing days at Tottenham, where Hughton was assistant manager, before the former Scotland international was handed a coaching role at Newcastle in January 2009 alongside the then Magpies number two.
After twice taking the caretaker role at Newcastle, Hughton was finally appointed permanent manager in October 2009, with Calderwood his assistant as they guided Newcastle to the Championship title.
The duo parted ways after Calderwood accepted the manager's job at Hibernian in October 2010, with Hughton then relieved of his duties by Newcastle just two months later.