The former Scotland skipper, who earned 85 caps for his country and toured with the British and Irish Lions in 2009, will be joined by Assistant coaches Matt Taylor and Dan McFarland from Glasgow Warriors at the end of the 2016/17 season.
He will take up his new role as Skills Coach to the national team after the Warriors' final match of the season against Edinburgh Rugby this Saturday, while retaining his duties and responsibilities to the club outwith the test-match windows.
Mike said: "I'm delighted to take on this role with Scotland at an exciting time in the team's development. I'm fortunate that I am able to maintain my involvement with Glasgow Warriors, where I have been coaching a talented group of players in a hugely positive environment.
"Being a young coach, I feel very lucky to work with coaches of the calibre of Gregor (Townsend) and Dave (Rennie) and hope I can contribute to further successes for both Scotland and Glasgow on the pitch."
Gregor added: "Mike [Blair] has thrived as a coach since his retirement from playing at the end of last season. He's proven to be an excellent addition to the Warriors' backroom staff and I'm delighted to bring that expertise into the Scotland set-up.
"He will perform a similar role with the national team, which will be focused on three areas: assisting with our attack, improving our skills and also working closely with our group of scrum-halves."