Edwards left London Wasps in November last year and was heavily linked with a spot in the England set up before signing a new long-term deal with Wales.
He is expected to spend one day a week with the Exiles who just missed out on a Heineken Cup place after finishing seventh in the Aviva Premiership.
"I'm excited at the opportunity of being involved in a Premiership Club set up again. London Irish has some fantastic players," said Edwards, who could still be involved with the Lions in 2013.
"The squad has put in some great performances this season and have been unlucky not to come away with more wins. I want to work with the team to see how we can then turn those frustrating last-minute defeats into victories."
Edwards' appointment is the latest development in a major reshuffle at Sudbury and the Madejski Stadium.
It comes in the wake of yesterday's announcement that head coach Toby Booth and assistant Neil Hatley are joining Bath next season, while Justin Bishop is also leaving the club.
Edwards will work under the stewardship of Brian Smith and the former Australia and Ireland fly-half, who rejoined the club from England earlier this year, is convinced the double Grand Slam winner is the right man to take them forward.
"Shaun is a world-class coach and he has been responsible for introducing a defensive system that has changed the shape of the modern game, consistently producing water tight defences in the Premiership, Six Nations, Lions tours and Rugby World Cups," said Smith.
"He is a tough, hard-nosed coach, who I am confident will, alongside me, help to bring out the very best in the London Irish squad.
"We will have a strategy in place for next season to slash the numbers of points we concede in the Aviva Premiership. If we can do that then, this time next year, we can be a top four team and two games away from silverware."
London Irish are also looking for a forwards coach, with an announcement expected shortly.