The 58 year-old will take up his role in May.
The NZC have said Buchanan will establish New Zealand's new high-performance program, implement a consistent coaching philosophy across the country, build a talent identification system and oversee the national selection panel.
He was Australia coach for eight years from 1999, guiding the Aussies to three World Cup titles and a record 16 Test-match wins in a row.
"It's an honor to be appointed to this challenging role. It is a wonderful opportunity to build on the work that has been done," Buchanan said.
"New Zealand Cricket has a proud history and is a true honor to be given the responsibility. I want to be part of the next successful era and am committed to building sustainable high performance for New Zealand Cricket."
NZC chief executive Justin Vaughan said Buchanan's appointment gave the team an opportunity to improve on the world stage.
"He has a great cricketing pedigree and will provide outstanding leadership as NZC look to move forward," he said.
While Buchanan had an outstanding record of success with the Australia team, his methods were often seen as unorthodox and the value of his contribution was disputed.
Former captain Ricky Ponting rated his contribution highly but outspoken legspinner Shane Warne was often dismissive of his approach and input.
New Zealand recently reached the semi-finals of the World Cup, but that success followed a near-record losing streak in one-day internationals.
Under recent coaches John Bracewell, Andy Moles and Mark Greatbatch, New Zealand have dropped near the bottom of the world standings in both Tests and one-day matches.
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