The lock announced his retirement at the end of last season, having made 73 appearances for Saints since 2011.
He had stated his intention to move into coaching after doing some good work in the Academy during his time at Franklin's Gardens.
And Saints have now moved to give Craig a full-time role, appointing the 30-year-old as developing player programme (DPP) manager.
Craig will be part of a much-changed setup, which Saints hope can pave the way for further success during the 2019/20 season and beyond.
A total of 10 new graduates made their full debuts for Northampton during the previous campaign, and 45 per cent of the first-team squad is now made up of Academy alumni.
Five players graduated from the Under-18s side into the Senior Academy and are currently midway through their first pre-season campaign as professional players.
And with a host of fresh faces within the set-up this season, including new coach Jake Sharp and Craig, head of Academy Mark Hopley is excited to see the results his dynamic new team can produce.
“The club have once again upped the investment into the academy this season with Alex O’Dowd coming in as programme manager and Jake Sharp as another coach,” Hopley said.
“They join the team alongside Will Parkin, who will continue to lead the Under-16 group, while I’m delighted to confirm there’s one more addition in James Craig, who has re-joined the club having retired from his playing role with Saints at the end of last season.
“James will lead the DPP, which we have moved back into the Academy structure from the club’s community team.
“We’re confident this change will produce an alignment of coaching from DPP to first-15 level, and ensure ‘playing the Saints’ way’ is promoted throughout.
“I’m really excited with the changes we’ve made and also to welcome Jake and James on board; they are full of enthusiasm and really competent young coaches, so I am positive we can improve even further on last season in 2019/20 and beyond.”
An Under-15 player development group (PDG) will now run alongside the Under-16 PDG, granting exposure to the very best coaching in the region for those invited, alongside training with the best players in their age group and a movement-based strength and conditioning course.
The number of DPP sites will also be reduced from six to four, by merging Hunts & Peterborough with Cambridgeshire and East Northants with the Northampton Alliance.
And Craig, who is delighted to be back at Saints, said: "We wanted to ensure the highest-possible quality of coaching at each DPP site, so took the decision to operate from only four locations this season.
“This will allow our coaches to have a more individual focus on players to enhance their development, and provide a better experience for the players, parents and coaches involved.
“I’m absolutely thrilled to be back at the club on a full-time basis after gaining some invaluable experience coaching the Academy sides in recent seasons while I was still playing.
"I hope I can contribute to even more success for the Saints Academy as we look to bring through the next generation of standout players for Northampton.”