Dutt, 47, who had coached German first division teams such as SC Freiburg and Bayer Leverkusen apart from other second division and regional teams, will be in charge of developing young talents and promoting the training of football coaches, the DFB said.
He will also work closely with national coach Joachim Loew in preparing the German national team for the next football World Cup in Brazil in 2014.
Dutt denied that he is being groomed as a possible successor to Loew in the event the national coach refuses to renew his contract with the DFB after the World Cup.
He said his contract is for the post of sporting director and "there is no occasion or reason to speculate about Loew's successor".
On the contrary, he wished that Loew "will continue to serve as German national coach for a long time".
In a newspaper interview ahead of assuming his new office, Dutt said he was looking forward to working with Loew and other DFB coaches and has established a good rapport with the national coach and they shared the same vision for the team.
Dutt has been contracted for a period of four years. He succeeds Matthias Sammer, who has shifted to the Champions League finalists Bayern Munich, after serving as sporting director of Frankfurt-based DFB for six years.
Born on January 24, 1965 in Cologne as the son of an Indian father and a German mother, Dutt played in the junior teams of some football clubs near Stuttgart, where he grew up.
In 1983, he joined a regional football team and gradually worked his way up to the top levels of Germany's national football league.
He began his career as a coach in 1995 with a regional football team and later moved on to second division club Stuttgarter Kickers, SC Freiburg and Bayer Leverkusen.
He had joined Bayer Leverkusen in July last year on a three-year contract, but his contract was terminated in April after his team lost against second division team Dynamo Dresden. They also suffered a 1-7 drubbing by FC Barcelona in the European Champions League tournament in 2011.
