In a statement released by the IRFU, Farrell said: 'To have this opportunity to work with a very talented management and playing group really excites me.
'With a wealth of top-class experienced senior players and a fantastic crop of youngsters pushing hard, the future is very positive for Irish rugby, and I can't wait to get started.'
Schmidt welcomed the appointment.
'It's great to have Andy coming into our coaching team,' Schmidt said.
'The quality of his delivery and breadth of his experience, as well as the positive impact he had when coaching a number of our senior players during the 2013 Lions tour, will add real value for us.'
Farrell, 40, spent four years as an England assistant coach, in addition to being part of Warren Gatland's coaching support staff on the 2013 British and Irish Lions tour that was highlighted by a 2-1 Test series victory over Australia.
He won eight England caps as a player, including three appearances during the 2007 World Cup, after switching codes and joining Saracens.
Farrell had enjoyed an outstanding rugby league career, one that saw him make 370 appearances for Wigan, in addition to collecting England and Great Britain honours.
- Daily Mail