The 39-year-old, linked with the manager's job at Kilmarnock earlier this summer, acted as assistant to former caretaker boss Chris Morgan at Bramall Lane at the end of last season before the appointment of David Weir.
"On behalf of the club, I'd like to sincerely thank David for his efforts and wish him well for the future," Blades chief executive Julian Winter told the club's official website.
"Our academy is a major part of the football club and is quickly adapting to meet the needs of the club going forward."
Former defender Unsworth, who counts Everton, West Ham, Aston Villa and Portsmouth among his former clubs, spent 18 months as a player at Bramall Lane until January 2007 and returned to the club's Shirecliffe academy last season
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