The 36-year-old Argentinian, who played 12 times for the Reds in 2005, has been working as a youth team coach at Valencia but will now return to Merseyside to join the backroom team that also has Sammy Lee recently installed as assistant manager.
Boss Rafael Benitez said of Pellegrino: "His role will be first-team coach, and he will also carry out specialist training sessions. He can also work specifically with the defence, and also the reserves."
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