The former Newcastle United, West Ham United and England midfielder, who earned 33 senior caps for his country and was named in the PFA Team of the Year twice during his career, arrives from League Two side Chesterfield where he served as first-team coach on Paul Cook's staff.
Southend confirmed the appointment, stating that Dyer was selected following a thorough recruitment process that considered candidates from across the United Kingdom and abroad.
Dyer spoke about his ambitions for the role.
"I'm really proud and privileged. Southend are the biggest club in the National League and deserve to be a league club. I'm really excited to get started and hopefully get this club into the Football League, where it belongs."
He was emphatic about his approach.
"We will fear no one in this league. We will try to dominate the ball and play with such a high intensity — it's one of my non-negotiables. I feel if we do these things then we have a great chance. To the supporters, I'll do everything I can to be successful, so enjoy the ride."
Dyer succeeds Kevin Maher, who was dismissed after the season ended despite guiding the club to the National League play-offs in each of the previous two years.