The former All Black will serve as technical advisor to the Japan Rugby Football Union until the end of the year before becoming head coach on January 1 as a result of his on-going commitments to Japanese Top League side NEC Green Rockets.
"For me, it's an exciting challenge," said the 41-year-old. "Japanese rugby has been very strong in my heart for a long time, so I'm pleased to help the Japanese union realise their dream, which is to win two games at the next World Cup and build a side that is going to be very competitive internationally."
Kirwan, who won 63 caps for New Zealand, has spent several years working in Japan, joining the Green Rockets in 1996 as player-coach before later taking on the coaching responsibilities at the club on a full-time basis.
He left in 2002 to coach the Italian national team.
He will oversee Japan's attempt to qualify for the World Cup next month in Sri Lanka, when they take on Hong Kong on November 19 before meeting South Korea six days later.
Osamu Ota will remain as interim head coach for those games.
"Our first step is to qualify for the World Cup, that's important," said Kirwan, who won the World Cup in 1987 as a player.
"We have lots of challenges with less than one year to the World Cup. Yes, it's difficult, but my belief is there.
"We must have a very strong spirit and really work hard next year, and forget about the negatives. We must go to the World Cup, and we should be very positive because Japanese rugby is improving."
Kirwan praised Japan's professional league structure and believes it is time the national team reflected the advances made within the domestic game.
"The positive thing about Japan is that we have a good club set-up," said Kirwan.
"The clubs now have good training fields and good gyms. Also, the Top League is getting better.
"I think what the Japanese side needs is to compliment that. We need to see the growth coming out on the international stage."
Kirwan is believed to have signed a two-year contract with the JRFU and will take over from Frenchman Jean-Pierre Elisalde, who was fired after taking on the post of general manager with French club Bayonne without consulting the Japanese union in September.