Bhutia, who retired from international football in 2011 following the national team's dismal showing in the Asian Cup in Doha, where it failed to win a single match, was the torchbearer of Indian football during a career spanning 16 years.
"He is becoming chairman of the technical committee. The decision was taken by president Praful Patel. Normally, any committee or head of it is formed with the concurrence of the president," AIFF vice-president Subrata Dutta told PTI.
Bhutia's appointment means former India international Mohammad Habib would be removed as head of the technical committee.
Besides Habib, the current committee consists of former international players such as Habib, Inder Singh and Pradip Chowdhury.
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Habib had last year accused the AIFF of making its much-hyped technical committee defunct.
Bhutia has scored an Indian record 42 goals from 107 appearances in the national jersey, but is on the verge of being overtaken by current skipper Sunil Chhetri, who is just two strikes behind his former captain.