The 34-year-old midfielder made more than 150 appearances for Albion after joining in March 2009 from Stockport County. He made the move permanent in July 2009 and spent the next four seasons with the club.
After spells with Rochdale, Crawley Town and Carlisle, Dicker joined Scottish Premiership side Kilmarnock in 2016, making more than 150 appearances and coaching the reserve team for four years before he was released at the end of last season.
Dicker's role will be similar to that of his former Albion teammate Andrew Crofts, who mentored and coached the young players before he was appointed under-23s head coach earlier this month.
Technical Director Dan Ashworth explained, "We wanted to continue with the mentoring role, via an overage player in the under-23s, as it proved very successful with Andrew Crofts in that role.
"When we had conversations about who might come into the role Gary stood out because of his links to the club, his interest in coaching and because he's still got a lot to offer as a player, both in terms of what he can bring to the team and the positive influence he can have on the other players. We're delighted he's back at Brighton and are looking forward to working with him."
Head of Academy John Morling said, "Gary is a top professional and the players in the under-23s will benefit from his knowledge and experience. This role also gives him an opportunity to develop his coaching career and we wish him all the best for his new role."
Dicker said he is thrilled to be back at a club which has always been close to his heart.
"I'm absolutely delighted to have been given this opportunity, which I think is perfect for me. I was honoured to be asked.
"I believe I can be a good influence with the young players on the pitch by passing on my experience and being an important part of the team while learning more about coaching from the great coaches there are at the club. The club has made unbelievable progress, with so many great young players coming through, and I'm looking forward to helping that continue."
Under-23s coach Crofts added, "I'm delighted that Dicksy is coming back to the club and in a role which I think is perfect for him.
"I had a conversation with [Head of Academy] John Morling, [Technical Director] Dan Ashworth and my assistant Shannon Ruth and we felt he was the right appointment at the right time in his career.
"He knows what the club is all about, he has started his own coaching journey and he enjoys working with young players. He has already had a positive influence with the group. His role is more on the playing side than coaching at the moment, but he will be working on the training pitch with the players and will get coaching opportunities with our other age-group squads.
"As a player he's still got a lot to offer. He's a great communicator and I know he will bring a lot of energy and positivity to the role."