Thompson had been out of football since leaving Celtic but now takes up the post as Under-21 coach at St Andrew’s.
Lee Clark: “I am delighted to have Alan on board in what was a very difficult decision with outstanding candidates.
“His passion and desire stood out but also his knowledge of working at a club like Celtic - both as a player and a coach – where there are huge expectations.
“He has experience at all levels of coaching in senior football.
“We are delighted to welcome him to Birmingham City and to help continue the pathway for our young players to the first team.”