Former Dons boss Ince, appointed manager at Bloomfield Road Road this week, has moved quickly to add Rae to his team having also worked with the 43-year-old at Notts County.
A statement on the club's official website said: "The club can confirm that Alex Rae has left his post as chief scout to take up a position with Blackpool.
"The former Rangers, Wolves and Sunderland midfielder heads to Bloomfield Road to join the Seasiders' coaching staff under manager Paul Ince.
"Rae, who has been with the Dons for 12 months, has previously worked with Ince at the Dons and Notts County.
"His move to the Championship side sees him take up a role in Ince's backroom staff at Blackpool."
It is the second time Rae has left the Dons. He was on the coaching staff under Ince when the former England midfielder left stadium:mk, staying on as one of Karl Robinson's first-team coaches.
But when Ince got the manager's job at Notts County, Rae quickly followed him to Meadow Lane.
Ince was sacked shortly afterwards and Rae returned to the Dons - this time as Robinson's chief scout.