The 45-year-old, who took over Ray Wilkins after he left the club in November, will oversee a scouting network and youth development programmes, as well as supporting new manager Andre Villas-Boas.
Pitchside: Emenalo (centre) replaced Ray Wilkins as former Chelsea boss Carlo Ancelotti's assistant for the msot part of last season
A statement on Chelsea's website read: 'Michael takes on a vital role that will assist the overall long-term football strategy of the club.'
Emenalo was a surprise choice to succeed Wilkins in November because of his lack of experience at the highest level.
A former Nigeria international, he was brought to the club in a scouting position in 2007 when Avram Grant was in charge.
Villas-Boas could find no place for him in his coaching set-up, though, and he has now been given the sporting director job.
Talking tactics: Villas-Boas (right) with his new No 2, former West Brom boss Roberto Di Matteo
He told the club's official website: 'Without delving too deeply into it, the first thing is that I'm going to be supporting the manager and working with him in making sure that things run smoothly.
'I have the responsibility to direct and manage our scouting structure internationally and domestically, and to keep an eye on and assist the progress of the academy. That's the simple summation.
'Over the next weeks and months I will be getting the scouts in place, finding the people that will lead the scouts along with me, and integrating the agendas and ideas of the different areas from the first team to the academy.'
Chelsea have also promoted Dermot Drummy from youth-team to reserve manager, with Adrian Viveash taking his place in his previous position.
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Source: Daily Mail
Source: Daily Mail