The 39-year-old Taylor is leaving his job at Super 15 champions Queensland Reds at the end of their domestic season this year to return to Scotland. Part of his remit will be to work alongside Gregor Townsend as part of the Glasgow Warriors coaching team.
"At the Queensland Reds we based our success around the defensive side of the game and replicating that in Scotland, where fans recognise the team for their defensive nous, will be critical to my role and to the overall success of the team," said Taylor.
"Accomplishing this is a challenge I am eager to take on after I complete my commitments to what has been an extremely successful and satisfying association with the Queensland."
Born in Brisbane to Scottish parents from Dunfermline, Taylor played for Queensland at Under 21 level and also represented the Australian Barbarians. He initially arrived in Scotland in season 1999/2000 to play for Aberdeen GSFP and was subsequently selected for the victorious Caledonian district side who won that year's district championship.
He secured a contract with Edinburgh Rugby in May 2000 and transferred to the Borders in summer 2002. He represented the Scotland Development XV and Scotland A in their victories over Tonga and Argentina in November 2001 and returned to A duty in the win over Italy A in February 2002. His last game for Scotland A was as a replacement in the November 2002 win over Fiji.
"I believe Matt Taylor's appointment is a coup for us. He is someone who is passionate about Scotland and Scottish rugby and his record with Queensland Reds, and the esteem in which he is held, speaks volumes about what he will bring to his new role," said Scotland head coach Andy Robinson.
Taylor is the second new recruit to the Scottish international coaching staff following the decision by former Wales, Australia and USA coach Scott Johnson to leave the Ospreys to join forces with Robinson this summer.