The former Villa and Celtic midfielder has joined the club's staff and will help to coach the senior squad.
Petrov, now 35, was diagnosed with leukaemia in 2012 and retired in May 2013 despite being in remission.
Sherwood has brought him back and believes Petrov will be an asset for the club.
"I would never bring him in to be a mascot
He's got a very technical and gifted mind, I want him in here as quick as possible," said Sherwood.
"Stan will always have a place at this football club while I'm manager."
Petrov had already made one attempt to return to a coaching post at Villa but was forced to stop assisting the under-21 side in August 2013 after admitting it had come too soon after his illness.
He made 219 appearances for Villa between 2006 and 2012 after a move from Celtic, scoring 12 goals for the club.
Villa are 17th in the Barclays Premier League and host West Brom in the FA Cup quarter final on Saturday, after their 2-1 league win over the Baggies on Tuesday.
Source : PA
Source: PA