MacTavish, 53, was head coach of the Oilers for eight seasons from 2000 and 2009, including Edmonton's run to the Stanley Cup final in 2006 when they lost in seven games to the Carolina Hurricanes.
The London, Ont., native was fired in 2009 after the Oilers missed the playoffs for a third straight season.
MacTavish spent this past season coaching the Vancouver Canucks' American Hockey League affiliate, the Chicago Wolves, to a 42-27-7 record. The Wolves announced his resignation Monday.
The Oilers are currently looking for a new head coach to replace Tom Renney, who was hired as head coach after Pat Quinn's dismissal. The Oilers didn't renew Renney's contract this year.
MacTavish was a hockey analyst with TSN for two seasons prior to coaching the Wolves. He also earned a masters degree in business from Queen's during the two years he wasn't coaching a hockey team.
Note to readers: This is a corrected version of an earlier story. Tom Renney replaced Pat Quinn as the Oilers head coach, not Craig MacTavish as previously stated.