The Barbados-born 69-year-old, who played three Tests and three one-day internationals for England in the early 1980s, will sit on both the men's senior and youth selection panels.
Butcher said: "It is a great honour and a privilege to be given the opportunity to serve West Indies Cricket.
"I'm eager to get started to work alongside the other members of the selection panels as we look to ensure the growth and improvement in West Indies cricket at all levels."
The Windies have also named former Jamaica wicketkeeper Andre Coley as their interim head coach for the upcoming tours of South Africa and Zimbabwe.
Phil Simmons decided to leave his role following a disappointing performance at the recent T20 World Cup and the board have turned to a familiar face to stand in for tours across January, February and March.
West Indies director of cricket Jimmy Adams said: "We welcome Andre back to the West Indies dressing room and with his wealth of knowledge of the game, player-management skills, dedication and hard work, as well as attention to detail, we know he is well equipped.
"He will approach this new role with the same vigour and zeal which have characterised his time in the CWI coaching system and has earned the respect of players and everyone who he has interacted with."
Coley added: "West Indies cricket holds a special place in my heart. I look forward to the tours ahead and the opportunity to make a tangible and meaningful contribution to the growth of West Indies cricket."