Crawley manager Steve Evans said: "The quality of the applicants has been excellent but Mark stood out as the outstanding candidate.
"We have a small management team where everyone plays a vital part and we look forward to working with him."
Stein, who began his career at Luton, also played for QPR, Oxford and Stoke City.
I am sure he will play a vital role as we meet our challenges ahead
Steve Evans on Mark Stein
He helped Luton to win the League Cup in 1988 with a shock 3-2 victory over Arsenal at Wembley, and appeared in the 1994 FA Cup final as Chelsea were beaten 4-0 by Manchester United.
''He is a legend at Chelsea as a player but it was his medical knowledge and track record in player injury rehabilitation that resulted in him being my choice," added Evans.
"He is delighted to be joining us; I am sure he will play a vital role as we meet our challenges ahead.
''Our interview process was thorough and extensive and I would like to thank all the applicants.
"There is a number of good people around waiting on an opportunity, I wish each of them every success."
Source: BBC Sport
Source: BBC Sport