The 46-year-old had been in the role on an interim basis since June and has now taken on the position on a full-time basis.
Wilcox joined the City academy coaching staff five years ago, coaching the Under-18s squad to a national championship title and two FA Youth Cup finals.
In the summer of 2016, the former England international was appointed head of academy coaching and has helped to oversee the academy's relocation from Platt Lane to its current location in east Manchester.
Wilcox, who won the Premier League with Blackburn in 1995, told the official City site: "I have really enjoyed my time at Manchester City over the last five years and I am excited to take on this new challenge at the club as academy director.
"The City Football Academy is a state of the art youth development facility, but the passion and the commitment of the staff and players will really make a difference to what we can achieve going forward.
"Our goal is to develop well-rounded, talented individuals on and off the pitch and I am relishing the opportunity to help us meet this objective day in and day out."
Wilcox has also played for Leeds United, Leicester City and Blackpool.