The straight-talking coach led NSW to two Sheffield Shield titles, helped Sri Lanka to the finals of the 2009 World Twenty20 and the 2011 World Cup and twice won the Indian Premier League with the Kolkata Knight Riders.
He was appointed after compatriots Justin Langer and Jason Gillespie were previously linked to the role.
Bayliss hopes to arrive in England in mid-June to watch the last few games of the one-day series against New Zealand as well as the Twenty20 matches.
He'll then take over from interim coach Paul Farbrace who'll become his assistant.
The pair joined forces in Sri Lanka and together endured a 2009 terrorist attack on the team bus in Pakistan.
Former Australian test player Marcus North, who played under Bayliss at the Sydney Sixers, says the coach keeps things simple.
"As an all-around package he's going to be an outstanding addition to English cricket," North told Sky Sports. "I know for a fact the Australian cricket team will be a lot more cautious now that the England cricket side has got Trevor Bayliss as coach.
"The England cricket team will only be a harder, more disciplined side come the Ashes in a month's time."
Bayliss was given the nod because ECB director of cricket Andrew Strauss believes he's best placed to reverse England's poor form in one-day and Twenty20 cricket.
"His expertise in the shorter forms of the game will be vital as we build towards three major ICC events over the next four years," the former England captain said, citing the World T20 tournament in India in 2016 and the Champions Trophy and World Cup both in the UK in 2017 and 2019 respectively.
"[Bayliss] has a strong reputation for man-management and has shown how to build winning teams in all three formats."
Cricket NSW chief executive Andrew Jones said: "The highly anticipated Ashes series will now have an extra dimension with Trevor coming up against nine NSW players he helped mentor who make up the bulk of Australia's squad."
AAP