ESPN revealed in May that Deco was in line to replace Jordi Cruyff, who left his role with Barca earlier this year to embark on new professional challenges.
However, Barca say Deco will also take over director of football Mateu Alemany's duties once the transfer window ends.
"Deco will be in charge of setting the club's sporting philosophy and putting together the squad with the coach, becoming head of the football section," the Catalan club said in a statement.
"His appointment is in line with the information released in May in which president [Joan Laporta] and [Alemany] agreed the latter's release from his role once the current transfer window closes on Sept. 2.
"Deco and Alemany will continue to work together until the closing of the window. In the coming weeks, the club will release details of the [new] sporting structure."
Prior to Wednesday's announcement, Deco had already been working throughout the summer in conjunction with Alemany and first team coach Xavi Hernandez on recruitment.
Born in Brazil, sources said Barca value Deco's knowledge and contacts in South American football, a market they are keen to exploit.
He has already played a key role in helping close an agreement for striker Vitor Roque, who will join Barca from Athletico Paranaense next year.
Deco, 45, had to give up his work as an agent to take on his new position at Barca.
Also on Wednesday, it was confirmed that coach Xavi Hernandez and winger Raphinha will each serve two-match bans after being shown red cards in Barcelona's 0-0 draw with Getafe in their opening LaLiga match on Sunday.