The Hall of Famer, now 49, will be a "brand ambassador," team president Rod Wood told The Detroit News.
"We've thankfully, the last couple years, had an unofficial relationship with him," Wood told the newspaper. "This year, we formalized it. You described it well, it's kind of a brand ambassador. He'll be going on road trips, showing up for suite visits, he'll be at the Taste of the Lions event, and just interacting with our fans on behalf of the team.
"It's a formal agreement. I worked with Barry and his agent to put something together that works for both of us. It's not a football role. It's more of a marketing, business role."
Sanders' agent, J.B. Bernstein, said the Lions have been pursuing an increased post-career role for Sanders.
"The Lions have always made an effort, every single season since Barry retired," Bernstein told the Detroit News. "Granted, the first couple seasons were to get him to come back and play. But once those first couple seasons passed, there hasn't been a year they haven't reached out to Barry to make sure they include him in everything from alumni games to events in the community.
"The opportunity to have this relationship with the team has always been there for him. The Fords, everybody from the top on down, they've always wanted to have Barry involved as much as possible. Now, we're getting to the point where he has some significant time to allocate to the team and we're excited about it."
Sanders stunned the organization and the NFL by retiring at the age of 31 after 10 seasons shortly before the start of the 1999 training camp.
Sanders, drafted third overall in 1989 out of Oklahoma State, topped 1,000 yards in each of his 10 seasons, including 2,053 yards during the 1997 campaign. His 15,269 yards are the most in franchise history and third all-time behind Emmitt Smith and Walter Payton.
The Lions icon was elected to the Pro Football Hall of Fame in 2004, his first year of eligibility.
At this year's Super Bowl, Sanders said he met with Wood and general manager Bob Quinn shortly after they were hired by the organization.
"I had good meetings with both of them, joked with Quinn about how similar Detroit is to Boston," Sanders said. "Pretty early on, I had a chance to talk with them and they said the door is always open. They definitely made me welcome and at home."