Mcgahan is promoted from within the exisiting Munster coaching set-up and will take up his new position on 1 July following confirmation by the IRFU.
Speaking from Sydney, where he is currently on holiday, McGahan said:, "I am delighted to be chosen as the next Munster Director of Coaching. It is a privilege and a great honour to be asked to lead one of the top clubs and biggest brand names in world rugby
"Having been involved with Munster for the past three seasons I fully realise what the expectations of all Munster supporters are. With a solid group of senior players at my disposal plus an exciting batch of young players coming through, a talented management group and strong administration, I hope to continue and fulfil those expectations in the short and long term.
"I am looking forward to the challenges ahead, both in Magners League and Heineken Cup competitions. I have enjoyed my time working under Declan Kidney and would like to wish him all the very best in his role with the national side."
McGahan continues a strong line of Austrlaian coaching links with the two times European champions. Alan Gaffney was head coach while Kidney was at Leinster and Jim Williams was forwards coach for the past two season. Munster Chief Executive Garrett Fitzgerald said: "Tony has been involved with us for the past number of years, a period that saw him play an integral part in our Heineken Cup success and consistency in the Magners League. In that time he has displayed all the qualities that we believe are required to keep Munster to the forefront and we wish him well in the challenging times that lie ahead."