Smith, who worked with the Otago Bunnings Cup squad in 2022, will take a part-time, two-days-a-week role assisting the counter-attacking development of the back three players.
Manu will take an operations and player mentoring role. While still playing - he was a member of Mid Canterbury's Heartland side this year - the chance to work with the Highlanders and mentor younger players was too good to turn down.
The pair has 218 appearances for the Highlanders between them. Smith played 84 Tests for the All Blacks, 153 games for the Highlanders and 44 games for Otago while also playing for Pau in French rugby and Kobelco Steelers in Japan before retiring.
Manu played 16 times for the Crusaders and 72 times for Canterbury while making 65 appearances for the Highlanders, 16 games for Edinburgh and 14 for Benetton Treviso in Italy. He played six Tests for Tonga.
"I don't know if it signals the end of my playing days just yet, at the moment I am excited about being able to continue to work in rugby and with the Highlanders," he said.
Manu had a bout with cancer late in his career but returned to playing in 2019.
Highlanders general manager of rugby Greg O'Brien said Manu was widely-respected in the team's ranks.
"Nasi came here in 2010 and had an immediate impact – his engaging approach off the field, and uncompromising play on it, certainly left a lasting impression.
"His professional attitude and passion will provide a positive influence for many of our up-and-coming players. His unique perspective and inspiration come from a guy who has been there and done that in rugby terms."
Smith was a hesitant starter in the coaching ranks.
"I wasn't sure if I would enjoy coaching or if the players would respond to my style.
"However, I enjoyed my time with Otago and was encouraged enough to commit some time to the Highlanders. As most would probably guess, this region and this team mean a great deal to me."
New head coach Clarke Dermody was delighted Smith accepted the role.
"Ben has only just retired from a great rugby career, and I knew he probably wasn't likely to want to commit all his time to coaching straight away.
"As one of world rugby's best counter-attackers from fullback, he understands the role of the back three in detail, and the knowledge will be able to impart to our players will be invaluable."