After retiring as a player with a long-term back condition in 2014, Troughton, 37, became assistant coach to previous director of cricket Dougie Brown
He will now work under the new Bears director of cricket, still expected to be Ashley Giles, once a compensation figure has been agreed with Lancashire.
"I'm excited by the challenge to achieve more success," said Troughton.
"We boast a strong squad that contains a good blend of experienced international cricketers and exciting, young talent, which should be capable of challenging in all three formats of the game."
"Having grown up as a Bear and spent all of my cricketing life at Edgbaston, Warwickshire obviously means a huge amount to me."
Troughton will work alongside county captain Ian Bell, bowling coach Alan Richardson and batting & second XI coach Tony Frost as part of the new structure under the director of cricket.
Warwickshire chief executive Neil Snowball added: "This is a key appointment for the club that has been made both with a focus on the 2017 season but also with an eye to the future. We look forward to Jim working closely with our new director of cricket once he has been appointed."
Warwickshire have appointed their former captain Jim Troughton as first-team coach.