Louis van Gaal will return to Ajax as general manager in July 2012, the club announced on Thursday, provoking the anger of club legend and board member Johan Cruyff.
Van Gaal, 60, will work alongside sporting director Danny Blind and commercial director Martin Sturkenboom as part of a new leadership structure at the home of the four-time European champions.
The former Bayern Munich coach managed Ajax between 1991 and 1997, notably leading them to the Champions League title in 1995, and was sporting director from 2003 to 2004.
However, Van Gaal's appointment was made against the wishes of Cruyff, who has never been able to hide his dislike of his countryman.
"They've gone mad," said Cruyff when informed of the decision.
Cruyff had wanted to install former Ajax striker Marco van Basten as the club's general manager but said he would not relinquish his post on the five-man board despite van Gaal's arrival.
Two weeks ago, van Gaal said that he would never return to Ajax "as long as Johan Cruyff is at the club".
Van Gaal remains on the payroll at Bayern, where he worked from 2009 to April 2011, which is why he cannot take up his position at Ajax for another eight months.
"Van Gaal's arrival is in the interest of the club," said Steven ten Have, president of the advisory board.
"If he and Cruyff work together for Ajax, they may be able to look beyond certain rivalries."
Van Gaal's return is likely to create tension at Ajax, however, where Cruyff counts head coach Frank de Boer and coach Dennis Bergkamp among his supporters.