The 43-year-old, who played for the likes of Rangers and Sunderland, had most recently been the chief scout at the MK Dons.
However, having previously worked with Ince during his stint in charge of the Dons, Rae has decided to take the new Blackpool boss up on his offer to sign on at Bloomfield Road.
"He came up from Milton Keynes yesterday so that's all done and dusted," Ince told the club's official website. "He's got a vast amount of knowledge which he can lend to the players and the rest of the staff. He's now part of the team alongside Tommo."
Ince's first match in charge of the Seasiders ended in a 2-0 defeat away at Leeds United last night.