Carlisle retired at the end of the 2021 season and will now suit up in EDFL Division 1.
Sherman takes over from former Carlton captain Lance Whitnall.
The Craigieburn Football Club said they were thrilled to welcome Carlisle back to the club where he had been such a prominent figure in his youth.
"Craigieburn Football Club is proud and delighted to announce Jake Carlisle is returning to grassroots football," the club said.
"Jake, who started his football journey with Craigieburn and Calder Cannons U’18s, was drafted by the Essendon Football Club in 2009 with pick 24.
"He played 84 games for Essendon between 2019-2015 kicking 54 goals.
"In 2016 he moved to St Kilda Football club where he played 66 games up until 2021.
Whilst fulfilling his AFL career he has continued to support the club and has been in regular contact with the playing group at Craigieburn. He fits well into our core values as a very humble individual."
Carlisle will work with the club's junior and senior programs with the possibility of returning to the field in the near future remaining on the cards.
"He now returns to the club to be involved in developing our juniors as well as mentoring our coaches and senior playing group," the club said.
"Jake has aspirations to return to the field in the near future, but after a long time in the game, he is keen to rest his body and spend time with his young family.
"He will work alongside new senior coach Justin Sherman and his team, bringing a depth of knowledge, professionalism and strong culture.
"The committee and club are delighted with the decision Jake has made to return to local footy.
"We would like to extend a warm welcome to Jake’s family, his partner Melanie and the three boys to our family club.