The former Huddersfield Town midfielder, 32, who recently announced that he was ending his playing career after leaving FC Halifax Town, will be assisted by lead development coach and former Bradford Park Avenue chief Martin Drury and head of recruitment Greg Abbott.
The trio have all signed three-year deals.
Collins, 32, who has also played for a number of league clubs, said: “I’ve been working towards this for a lot of years now. Even when I was playing at Oxford I was coaching locally, and when I was at Leyton Orient I’d be in at Spurs’ training ground as often as I could.
“I’m honoured that Edin and Stefan have entrusted me with the head coach role, but we truly are a team here and I can’t stress that enough. Martin is one of the best coaches I’ve ever worked with and Greg’s experience is invaluable for us both.
“We’ve all been fortunate enough to have had the chance to observe the previous managers at the club and we’ve seen first-hand the way that they worked. We can take a lot of positives from what we’ve seen over the last two years.”
City co-owner Edin Rahic said: “Michael and Martin are both talented British coaches, who posses a lot of potential. Together with Greg’s experience we have a very good blend in the coaching team”
“All three of them really understand the club, share our vision and believe in what we’re trying to achieve”
Stressing that no other interviewed candidates were offered the head coaching position, he added: “We respect everyone who applied for the role and were encouraged by the calibre of those who showed an interest in the position. We have interviewed a lot of coaches over the past few weeks, all with different ideas and approaches.”
“However, as the process developed we didn’t find anyone who we felt had a greater connection to, or a better understanding of Bradford City.”