The 52-year-old will link back up with his former Manchester United team-mate Steve Bruce for the weekend trip to Manchester City.
Phelan's arrival comes with the club deep in a Premier League relegation battle and speculation over Bruce's own future starting to grow.
Phelan said: "I'm extremely pleased to be at this football club.
"I want to work hard and channel all of my energy into helping the staff, the players and everybody associated with the club.
"I'm looking forward to working with Steve and hopefully I can bring with me some of the things I have learnt over the years to help us improve."
Phelan spent five years as assistant to Sir Alex Ferguson at Manchester United before leaving the club when Ferguson retired in 2013.
He moved on for a brief spell as assistant manager at Norwich but left shortly after the departure of boss Neil Adams last month.
Last Saturday's abject 3-0 home defeat to Newcastle was Hull's third in a row and left them third from bottom of the table.
And Bruce was left frustrated in the January transfer window as only one of his stated targets - Dame N'Doye - arrived to bolster his side's survival battle.
Bruce said: "I'm delighted to welcome Mike to the club
Mike brings a wealth of experience to the position having worked with Sir Alex at Manchester United for many years
"I've known Mike for a long time and he is a good person who will undoubtedly add something different at the training ground."
Source : PA
Source: PA