He was head coach for Royal Challengers Bangalore in the IPL from 2014 to 2018 where he worked with McDonald.
Among his other coaching assignments Vettori has also been with the Brisbane Heat Big Bash side and with the Bangladesh test side.
“I have worked with Daniel previously and could not speak more highly of his approach, work ethic and rapport he brings. His experience and balanced style are well documented. He is a great fit and will bring an enormous amount of knowledge to the team,” said McDonald.
Vettori did some coaching work with the side on their recent tour of Pakistan.
“I was really impressed with what I saw of the group in Pakistan in the way they approached preparation, planning and playing. It’s a very strong and unified group which has the potential to have a very rewarding and hopefully successful period ahead.”
CA’s head of high performance Ben Oliver said Vettori fitted in well with the side last month.
“Daniel joined the Pakistan tour for the white ball series and was warmly welcomed. His international experience in all forms of the game as a player and coach is almost unrivalled and his strategic insights, coaching approach and collaborative style will be invaluable for Andrew and the team.”
Vettori’s appointment to the Australia coaching role comes shortly after former Black Caps team-mate Brendon McCullum was named England Cricket’s new head coach of the test side.