Blair, 46, pitched for eight different teams over parts of 12 Major League seasons, including the 1995-96 seasons with the Padres.
Blair spent the last two seasons with Fort Wayne, helping develop a pitching staff that included Keyvius Sampson, Adys Portillo, Matt Stites, Matt Wisler and many others who are considered top prospects in the team's Minor League system.
"Willie did a terrific job for us with a young pitching staff both years," said Randy Smith, the Padres' vice president of player development and international scouting.
"The reaction of the players [to him] was positive. He's got some teeth; he won't let them get away with stuff. But at the same time, he's a good confidant and sounding board."
Blair replaced Jimmy Jones, who acted as the interim bullpen coach for part of last season after Darrel Akerfelds lost his battle with pancreatic cancer last June.
Blair won 16 games for the Tigers in 1997 and went a combined 9-11 with a 4.46 ERA in his two seasons with the Padres. Overall, he appeared in 418 Major League games (139 starts) and had a 5.04 ERA.
Earlier this month, the team offered the bullpen coach job to former Red Sox pitching coach Bob McClure. But family commitments prevented McClure from accepting the position.