The 33-year-old takes up the role having worked closely with the League Two club following his retirement last summer.
Vaughan brought his playing career to an end after 17 seasons, finishing off at Rovers – where he scored 22 goals in 38 appearances as Micky Mellon’s side lost to Morecambe in the play-offs.
He remained at Prenton Park following that decision, however, and has now been promoted to sporting director with the Wirral side second in the table and on course for promotion to League One.
The one-time Blues forward is currently studying for a masters in sporting directorship and will initially focus on recruitment.
Vaughan told Tranmere’s website: ‘Having been around the club for two years now and having spoken with the chairman, I am excited about being able to be part of the project going forwards.
‘I have always had a good relationship with Micky, both as a player and working with him as part of the team involved in building the current squad over the last six months.’
Vaughan played for 13 different clubs after making his debut for Everton in 2005.
One of those was Pompey, with the forward arriving on loan from Wigan in January 2019 as then manager Kenny Jackett attempted to reinforce his side’s promotion push to the Championship.
However, Vaughan failed to score in 11 appearances as the Blues lost their play-off semi-final against Sunderland.