Wheatley served in the same position for the Buffalo Bills over the past two seasons.
Wheatley played running back at Michigan from 1991-94 and was named Big Ten offensive player of the year in 1992.
"Having Tyrone back in the Maize and Blue will be very special for our program," Michigan coach Jim Harbaugh said in a news release. "He is a true leader, a dynamic coach and will make a profound impact on the young men who play for Michigan. I am so pleased to have him back in Schembechler Hall."
Michigan ranked eighth in the Big Ten in rushing yards per carry (4.60) last season.
"Michigan holds a special place in my heart and the chance to return here and help guide this program is truly a dream homecoming," Wheatley said. "Michigan helped make me the man, husband and father I am today, and I am passionate about passing those lessons on to the next generation of young men in Maize and Blue. I look forward to getting to work and thank Coach Harbaugh for the opportunity."