The 35-year-old defender won his third promotion to the uppermost division in May - the previous two having come with Crystal Palace and Cardiff.
Hudson played nearly 500 games in his career, over 100 of which came across three seasons with the Terriers.
He signed a three-year deal with the Yorkshire club in April 2016 and although his exact role in David Wagner's coaching set-up is yet to be defined, it was a transition that was anticipated when that contract was penned.
"I'm very happy that Mark is becoming part of my back-room staff," Wagner said.
"From my first day in England, Mark has been one of the biggest positives
He is a huge influence in our dressing room - a total professional with a winning mentality - and that was why securing his future to Huddersfield Town was so important last April
As a player and a potential coach, it was vital that we keep Mark here.
"Make no mistake, Mark made a huge contribution to the success this club enjoyed in 2016-17, both through his performances on the field and his influence off it.
"I believe the qualities that Mark has as a person and a footballer should make him an excellent coach
I know retirement can feel like a sad day as a former player, but he has so much still to give this club and football, and that is exciting.
"We will all help Mark as much as we can as he makes the transition into coaching and continues to learn, but I'm sure he will still be a big help and influence on our squad as we prepare for the Premier League."
Source : PA
Source: PA