Harry, who has twice been deployed to Afghanistan, will become a staff officer at HQ London District, which organises ceremonial spectacles like Trooping the Colour and state visits.
The prince will begin his job in the next few weeks and there is speculation his new role based in Horse Guards in central London will allow him to get in involved with the Warrior Games.
Harry flew to America last year to support competitors taking part in the games, a paralympic style event for injured servicemen and women, and he hopes to help bring the event to the UK.
Kensington Palace said in a statement: “The prince will take the position of SO3 (Defence Engagement). His responsibilities will include helping to co-ordinate significant projects and commemorative events involving the army in London. Prince Harry will retain the rank of captain and be based from Horse Guards, in Central London.
“Prince Harry spent three and a half years in training and operational service with the Apache Force during his attachment to the Army Air Corps.”
Lieutenant Colonel Tom de la Rue, who commanded Harry in the Army Air Corps, said: “Captain Wales has reached the pinnacle of flying excellence as an Apache pilot, particularly in Afghanistan and, in the process, has proved to be a real inspiration to the many Army Air Corps officers and soldiers.”