The Argentine voiced a desire to coach in China during a trip to Beijing in August, but has accepted the ambassadorial role with Dubai Sports Council (DSC) after turning down "unsatisfactory" coaching offers.
His new role will also help resolve a dispute with Al Wasl, which sacked him in July just over a year into a two-year contract.
"Dubai Sports Council and I have discussed a few ideas and they are serious about upgrading the sports sector in Dubai," the 51-year-old World Cup winner told a news conference in Dubai. "For those who think that I have fallen down or I have collapsed, I'm stronger now."
The former world player of the year offered few details as to what his job will entail and Ahmad al-Sharif, secretary-general of Dubai Sports Council, was similarly vague.
"Maradona will inspire the new generation of talented players to reach the highest athletic levels possible," said Sharif.
Maradona's appointment comes after he was sacked as coach of Dubai-based Al Wasl following a trophyless season in which the club finished eighth in the 12-team UAE Pro League and suffered a surprise defeat in the Gulf Champions League final.
The Argentine's 800,000 UAE dirhams ($217,800) a month contract with the club was until August 2013, which the Dubai Sports Council will now take over, said DSC spokesman Murad al-Masri.
Dubai subsidises several of the emirate's football clubs, paying Al Wasl, Al Ahli and Al Nasr 40 million dirhams each in 2012, while Al Shabab will receive 60 million dirhams this year, according to Masri. He explained this money goes towards the clubs' wider sporting operations, not just football.
Maradona described some of the pressures facing a coach, even in a relative football backwater such as the UAE.
"I used not to sleep at all and it's really hectic and really tiring. For me, I would like to live more years," he said. "I would like to retire or relax for some time."
