The 35-year-old won 130 caps for England - playing in three World Cups for the Lionesses.
Stoney, who also captained Team GB at the 2012 Olympics, will play her final match for Liverpool against Sunderland before officially linking up with Neville at the SheBelieves Cup in the United States in March.
"I am hugely excited about starting my next chapter," Stoney said in a statement. "Although I am sad to be hanging up my boots, I do so proud of what I have achieved and with great optimism about what the future holds for the women's game.
"I am thoroughly looking forward to working with Phil, who is an excellent choice to take the women's game forward.
"I talked to him at length before accepting the job and was hugely impressed with his vision, passion and eagerness to learn. I will be doing everything possible to support him alongside finishing my coaching badges."
At club level, Stoney has turned out for the likes of Chelsea, Arsenal and Liverpool.