The popular Yorkshireman will work with the Saddlers' new manager Jimmy Mullen and take up his post next month.
Schofield played for The Imps twice as well as Hull, Doncaster and Mansfield and managed City to the League Two play-offs in 2007 before being sacked last October after a dismal run of results culminating in a 4-0 reverse at MK Dons.
Mullen said "He is a young guy with a wealth of experience. He is a welcome addition to the backroom staff and I'm looking forward to working with him."
Schoey said "I'm really looking forward to taking up the position. I have experience of working with both senior and young professionals and am looking forward to working alongside Jimmy Mullen.
"After visiting the Banks's Stadium last week and having a tour of the club's new training ground, you can see that this football club is geared up for success."
I'm sure evryone connected with City wishes Schoey all the best.