Starting in September, McKellar will replace Darren Coleman after his third year in charge ended in the Waratahs finishing last with just two wins in 2024.
Having steered the Brumbies to the 2020 Super Rugby AU title, the Waratahs believe McKellar knows what it takes to build a successful culture and positive pathways program.
McKellar also boasts international experience in Japan and the English Premiership, where the 47-year-old recently finished up with Leicester.
"We're delighted to have a head coach of Dan McKellar's calibre joining the Waratahs," chief executive Paul Doorn said.
"Dan has an impressive coaching resume and achieved great success with the ACT Brumbies in Super Rugby during his five-year tenure.
"Dan will work closely with high-performance director Simon Raiwalui, and their partnership marks an exciting new frontier for the Waratahs.
"I am confident that the appointments of Dan and Simon will put the Waratahs on the path to delivering sustained success from 2025 and beyond."
After playing more than 150 premier-grade games for Souths Rugby Club in Brisbane, McKellar transferred into the club's coaching ranks.
He moved to Canberra in 2011 to take up the position of coaching director and head coach of the Tuggeranong Vikings, winning back-to-back premierships in the John I Dent Cup in 2011-12.
Following a stint in Japan as forwards coach of NTT DoCoMo Red Hurricanes in 2013, McKellar returned to the nation's capital the next year to join the Brumbies as the club's defence and skills coach, and then mentored the University of Canberra Vikings in the National Rugby Championship.
In 2018, McKellar was appointed head coach of the Brumbies, achieving considerable success over the next five years, highlighted by a semi-final appearance in 2019 and consecutive Super Rugby AU grand finals in 2020-21.
McKellar's talents were recognised in the national set-up where he was the Wallabies assistant coach from 2021-23.
"I'm extremely pleased to be joining the NSW Waratahs," he said.
"Rugby in NSW has a proud history of over 150 years and the Waratahs are the pinnacle of representation within the state.
"The club fell short of expectations in 2024 but there are building blocks in place to improve on.
"I'm motivated and passionate to deliver a vastly improved performance next season, comprising of consistent efforts that will make the loyal Waratahs fan base proud."
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