Morley played at Headingley before leaving the club at the age of 23 for spells with Sydney Rooster, Bradford Bulls and Warrington Wolves before ending his career at Salford Red Devils.
The 39-year-old is now set for a return at Leeds, where he will take charge of the academy while also being a part of the senior coaching team.
McDermott says he is looking forward to having Morley back as part of the coaching team and feels it is a great move by the club.
He told the club's official website: “The appointment of Adrian will certainly strengthen us for next season.
“To have secured Adrian is a massive boost to our youth development programme. He will work alongside our head of youth Simon Bell and I will definitely welcome his input on the first-team squad given his standing in the game and his record of achievement throughout his career.
"It is great that we have kept a man of his experience, on both sides of the hemisphere, in our game here in Super League. He has set himself the challenge of taking up a coaching role. This is a great opportunity for him to cut his teeth with the Rhinos as a coach and I look forward to supporting him to fulfil his potential as a coach.”