The 37-year-old enjoyed a successful 12-year spell as a player with the Red Devils before moving to Newcastle United in 2004.
United boss Sir Alex Ferguson has now revealed that the ex-midfielder will assist with the Under-21 side as he decides whether to go into management.
"Nicky is with the reserves," said the Scot. "He's completed his badges and is just getting a bit of experience with us.
"He's had a few opportunities to take on jobs but wanted just a wee bit of a chance to revisit the training ground again to get himself back into sync, which we're happy to do because he was a fantastic servant to us.
"I don't know what his long-term future is but, in the meantime, he's helping out with the reserves."
Butt brought the curtain down on his playing career in May 2011.