The Arsenal great will lead the team at next year's Olympic Games in Paris, replacing Sylvain Ripoll, who was sacked after France's early exit at this year's European Under-21s.
Former Angers manager Gerald Baticle will join Henry's staff as assistant coach.
France's second all-time top scorer, Henry will return to management after leaving his role as Belgium assistant coach following last year's World Cup.
Henry, also a former Barcelona player, previously coached Arsenal's youth teams, AS Monaco in Ligue 1 and Montreal in Major League Soccer.
Henry ended his playing career in 2014 as the all-time leading scorer for Arsenal - 228 goals - and after earning 123 caps and netting 51 goals for France.
Henry's debut in charge of the Under-21s will be for a friendly against Denmark on Sept. 7 before France take on Slovenia in the Euro qualifiers four days later.
