Rob Howley, who performed a caretaker role during Wales' tour Down Under earlier this summer, will again take the reins for the 2013 RBS 6 Nations.
Gatland's last games in charge of Wales will be against New Zealand and Australia in the autumn internationals before he begins preparations for four-game tour featuring three Tests against the Wallabies.
The Kiwi was part of the 2009 Lions tour to South Africa under Sir Ian McGeechan and was long rumoured to receive the head coach position but admits he was still honoured to become only the second foreigner to be given the post.
And he laid down the gauntlet to the players from all four countries that the race for selection starts now.
"I am really honoured to have been asked to take the position of head coach for the 2013 British & Irish Lions tour to Australia," he said.
"I really enjoyed the experience as one of the assistant coaches in 2009 and since then have harboured the ambition to lead the Tour to Australia next year.
"There is no question it will be one hell of a challenge. Playing in the southern hemisphere is one of rugby's hardest challenges.
"The Lions came close in South Africa and our ambition is to win the series in 2013, and I believe we have the players to do that.
"Over the coming months, I will give careful consideration to the make-up of my coaching staff and of course the playing squad itself.
"A Lions tour is unique; it is the ultimate career pinnacle for coaches and players. I want to ensure that we get the Tour environment right so that we are hugely competitive and that our fans are proud of the team."