The Scot has been coaching the under-18 side for the past three years but will now join Roberto Martinez and his team, beginning his role as first-team coach on Monday.
It is a move that has captured the imagination of the supporters given his revered status among Evertonians, with the thought of him sitting in the dugout and motivating the players in the dressing room an exciting one.
Speaking after his promotion was announced the 42-year-old revealed the feeling was mutual, telling the official Everton site:
"Everyone knows what this Club and the supporters mean to me and if the manager thinks I can make a contribution then I am delighted to do so. It¹s a very proud moment for me and it's a dream come true.
"I am really looking forward to my new role with the first-team and can't wait to work alongside the manager, Graeme Jones and the rest of the lads.
"I must thank Kevin Sheedy and all the coaches at the Academy for the help and support they've given me since I returned to Everton.
"There's a lot to play for this season, it's exciting times and I am made up to be a part of it."
Boss Roberto Martinez is equally enthusiastic about the appointment and has tipped Ferguson to go on and become a fantastic coach.
He's developing into a really exciting coach. He has been working with first-team on part-time basis and we need his influence in first-team environment.
"He is an Evertonian and an out-and-out influence internally and will be a big part of the staff in the first-team between now and the end of the season."
"He has been working hard to see the game from different angle and perspective and he has really impressed me. He will become someone special in the first-team.
"He has got the desire and hard work that is needed when you are in love with the game, that doesn't change.
"Duncan is really taking that role with desire and he can achieve has much as he wants I that area. There is a big difference in him from August to now. And now is the perfect time for him to have a permanent role in the first-team."
With Dunc now a part of the first-team set up it begs the question - is Ferguson a future manager of Everton Football Club? Have your say in our poll below.