Murphy managed the Robins between 1983 and 1988, overseeing promotion to the Conference - the fifth tier of English football.
He will now be handed particular responsibility for the club`s centre of excellence as Town look to implement a shake-up of their youth system over the next two years, assisting John Brough and Russell Milton.
Murphy, who made over 350 appearances as a player for Cheltenham during two separate spells, told the club`s official website: "I`m very much looking forward to the challenge.
"Over the past few years I`ve worked for the country`s two biggest scouting organisations and this has given me a very detailed insight into the professional game. It has helped me build a knowledge of the qualities required at each level as well as a network of contacts.
Chairman Paul Baker added: "Youth football is going to change considerably and clubs will have to adapt quickly to a new landscape. England`s poor performance at the 2010 World Cup has thrown the spotlight onto youth development and clubs will be required to operate within new criteria. The aim is to raise the bar and we want John to help us achieve that."
Source: PA
Source: PA