Sportal.co.nz 04.Sep.2012Getty Images
Gatland was the outstanding candidate for the post after leading Wales to the semi-finals of the 2011 Rugby World Cup and last season's Grand Slam triumph.
The Lions had initially planned to hold the announcement in April but were forced into a delay after Gatland broke both of his heels in a fall at his house in Waikato.
The 48-year-old will become the second New Zealander to lead the Lions on tour to Australia, after Graham Henry's failed attempt to beat the Wallabies in 2001.
Gatland is expected to confirm his full coaching team in October and it would be a surprise if the likes of Graham Rowntree and Shaun Edwards are not involved.
All three were part of the 2009 Lions management in South Africa and received the backing of head coach Ian McGeechan to carry the torch to Australia.
Gatland will coach Wales in their end-of-year Tests against New Zealand and Australia but otherwise he will seconded full-time to the Lions.
Rob Howley led Wales on their mid-year tour of Australia in Gatland's injury-enforced absence and will continue in that role through the 2013 Six Nations.
As a player, Gatland made 17 appearances for New Zealand although none of them in a Test match as he found his way to the hooker's jersey blocked by Shaun Fitzpatrick.
As a coach, Gatland demands high standards, he puts great stock in his teams being fitter than anyone else, he does not suffer fools gladly and he is not afraid to make the difficult calls.
In the first Lions Test of 2009, Gatland was prepared to replace the struggling Phil Vickery before half-time. Eventually the substitution came minutes after the interval.
Gatland began his international coaching career with Ireland between 1998 and 2001. He is credited, in some quarters, with laying the foundations for the Triple Crown and Grand Slam successes that followed over the last decade.
After being sacked in 2001 and replaced by Eddie O'Sullivan, the man he had appointed as his assistant, Gatland moved to Wasps and guided the London club to three Premiership titles and the Heineken Cup.
Gatland returned to New Zealand in 2006 to lead his native Waikato to the Air New Zealand Cup title before Wales came calling, just weeks after they had crashed out in the pool stages of the 2007 Rugby World Cup.
Gatland's impact was immediate. Wales beat England at Twickenham for the first time in 20 years to launch the first of two Grand Slam campaigns during his tenure.
The second was this year and it followed hot on the heels of Wales' greatest World Cup performance since 1987, when they came agonisingly close to beating France to earn a place in the final.
When Gatland leads the Lions to Australia, it will be 16 years since the Lions' last Test series victory, over world champions South Africa in 1997.
The Lions have lost to Australia (2001), New Zealand (2005) and South Africa (2009) in their last three Test series.
Next year's tour features 10 matches - the first of which will be against the Barbarians in Hong Kong on June 1 - and three Tests against the Wallabies, in Brisbane, Melbourne and Sydney.