Signed by Sir Bobby Robson in 2003, Caig spent three years at St. James' Park as a player, providing backup for fellow goalkeepers Shay Given and Steve Harper.
The Cumbrian, who amassed 220 competitive appearances for Carlisle United during the 1990s, had previously been a goalkeeping coach at Scottish Premiership side Dundee United but now returns to Newcastle 16 years after his departure as a player.
Caig will be based at the Magpies' Academy on a day-to-day basis and will play a leading role in the development of the club's 'keepers at Under-23 level as well as planning, organising and monitoring the Academy's overall goalkeeping programme from the youngest age.
Speaking about his appointment, Caig told nufc.co.uk: "I'm delighted to be offered the opportunity to take up the position. Once I was contacted by Steve Harper and talked through the specifics of the role, I knew it was something that I wanted to take on and, along with the other coaching staff, really help to develop the Academy Goalkeeping department.
"As a player, I was fortunate enough to be in a supporting role as part of the squad during the Sir Bobby Robson era so when the opportunity came about to return and work with some of the same people who are now at the club in different positions, it made the decision very easy for me.
"I also look forward to building relationships with new staff members that I've not had the chance to work with before."
Newcastle United Academy Manager Steve Harper added: "We're delighted to welcome Tony back to the club as Head of Academy Goalkeeping.
"Tony joins us with a remit to look at every aspect of the Academy goalkeeping programme and align it to the changes we've made to the coaching programme here at the Academy.
"Tony is vastly experienced both as a player and coach and leaves first-team football to join us. We are now at over 20 staffing changes in the last 12 months and the excellent addition of someone of Tony's pedigree demonstrates the progress we continue to make."
The club are also also pleased to announce that former Lead Academy Goalkeeping Coach Adam Bartlett, who began his playing career with the Magpies 17 years ago, has been promoted to first-team goalkeeping coach.
