Eade, who had been the Magpies' football and coaching strategist, has been interim director of football since Geoff Walsh quit the job in July.
The former Sydney and Western Bulldogs coach had also been a candidate for the Melbourne coaching position, which former Swans premiership coach Paul Roos is now expected to fill.
Magpies chief executive Gary Pert said Eade had a deep understanding of how good football departments function and a strong relationship with Collingwood's coaching staff.
"Once he settled in his mind that he wanted to chart a new career in the game, he was very enthusiastic about playing a significant and different role," Pert said.
Eade said he considered other options, including a senior coaching return, before deciding to stick with the Magpies.
"A part of me will always see the game through the eyes of a coach but the longer I thought about it, the idea of being able to offer assistance to (Magpies coach Nathan Buckley) in that way but in so many other ways as well became appealing," Eade said.