The west London club confirmed that the 48-year-old had agreed to assist Rangers boss Harry Redknapp, assistant manager Kevin Bond and first-team coach Joe Jordan.
Cotterill began his managerial career in England with hometown club Cheltenham in 1997, spending five years with the Gloucestershire side.
During his time at Whaddon Road Cotterill led Cheltenham out of the Conference in 1999, having won the FA Trophy the previous season.
In 2002 he earned another promotion to the third tier of the Football League via the play-offs and also steered the club to the fifth round of the FA Cup, their best-ever performance in the competition.
In the summer of that year he took over at Stoke but cut his stint short to become assistant to Howard Wilkinson at Sunderland in October.
However, they were unable to turn the Wearsiders' fortunes around and with the club bottom of the Premier League, they were sacked in March 2003.
Cotterill took over at Championship side Burnley in 2004 and served until November 2007 at Turf Moor before leaving by mutual consent.
He led Notts County to the League Two title in 2010 during a three-month stint at Meadow Lane before taking over at Portsmouth in June of that year.
Pompey finished 16th in the Championship in Cotterill's one full season in charge before he was approached to replace Steve McClaren at Forest.
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