The former Leinster boss will take over from Declan Kidney, who was in charge for five years but whose contract was not renewed following a dismal Six Nations.
Schmidt signed a three-year contract with the IRFU which will see him lead Ireland from 1 July through until after the 2016 Six Nations.
His tenure also includes the 2015 World Cup hosted by England.
"It's an honour to be selected as the Ireland Team Coach," the New Zealander said, speaking at a press conference which followed the announcement on Monday.
"I certainly appreciate the prompt and professional handling of the selection process by the IRFU, especially with regard to my current coaching commitment in Leinster, which I will continue to prioritise over the coming weeks."
I'm very conscious of the responsibilities that go with the position and look forward to working alongside the players in an effort to meet those responsibilities through the quality of our performance.
Schmidt steps up from his position with Leinster after beating Les Kiss and Ewen McKenzie in the race to fill the post vacated by Kidney on 2 April.
He had just penned a deal with the province until 2014, but has instead been promoted by the IRFU to Ireland's top job.
Kiss will lead the summer tour to the United States and Canada, so the autumn internationals against Samoa, Australia and New Zealand will be Schmidt's first matches in charge. A squad announcement will be made after the Lions squad for their tour of Australia is confirmed.
Philip Browne from the IRFU welcomed Schmidt, saying: "Joe has already delivered significant success to Irish rugby during his time with Leinster and we are confident that this will continue at international level.
"We thank all of those who were involved in this appointment, particularly our colleagues in Leinster, for allowing us the time and space to meet with and ultimately appoint Joe as Ireland coach."