The 40-year-old had two spells at Wasps, winning three Premiership titles, a Heineken Cup and Parker Pen Shield while working under Warren Gatland as the club's technical analyst and assistant coach.
Hanks left Wasps in 2005 and went on to win the Air New Zealand Cup and the Ranfurly Shield with Waikato, before working with the Chiefs and the Baby Blacks.
The New Zealander returned to Wasps to replace Sir Ian McGeechan as director of rugby however he failed to match his previous success at Adams Park and left in February.
However Hanks will now replace Pete Anglesea, who held the role on an interim basis, at the helm.
Sale Sharks executive director Steve Diamond said: "We are very pleased to announce Tony Hanks as our new first team coach at Sale Sharks.
"Tony will work alongside forwards coach Steve Scott, academy transition coach Pete Anglesea and performance manager Nigel Ashley-Jones. He will be responsible for attack, our game plan and our overall defensive strategy.
"Tony has worked with some of the best teams in the world and brings a level of experience and achievement that will be of immediate benefit to Sale Sharks.
"There was tremendous interest in this position and Tony has emerged ahead of several other high profile and experienced coaches. He is the final piece of the off-field jigsaw and we are delighted he has chosen to join us."
Tony Hanks added: "I'm excited to be joining Sale Sharks, especially at a stage when there have been many changes. With so many players joining to form a much-changed team, it's a great time to be involved and I share the massive sense of anticipation at the club."
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