Penney's appointment, with the transfer of Scott Robertson and Scott Hansen to the All Blacks coaching team next year, completes the coaching team for the 2024 Super Rugby Pacific campaign. He will have Tamati Ellison, Dan Perrin, James Marshall and Matt Todd as his assistants.
Penney coached the Waratahs from 2019-21 in Super Rugby. Penney has coached since his playing days with Canterbury, from he debuted in 1985 until retiring in 1994.
He was an assistant coach with the Crusaders in 2005, and between 2008-11 he coached Canterbury to four consecutive National Provincial Championships, during which time Robertson was one of his assistants.
In 2012, he was the head coach for the New Zealand Under-20 team at the world championships. He then was appointed head coach at Munster for the 2013-14 season.
He then took up a three-year position with the NTT Shining Arcs in Japan
After his Waratahs stint, Penney was appointed head coach of Japan's Under-20 side and will take them to the World Under-20 championship later this month before returning to New Zealand for his Crusaders' role from August 1.
Penney said: "The Crusaders' franchise has a strong history and record of success and excellence, both in on-field performance and off-field culture. I'm excited to immerse myself in the environment.
"While I'm excited to get started, my focus for now remains firmly with the Japan Under-20 side. I've loved watching the Crusaders this season and will be tuning in to watch the boys as they chase the title once again."
The chairman of the Crusaders, Grant Jarrold, said Penney's maturity, experience and success record set him aside from other candidates.
"Rob impressed us with his leadership qualities, experience, and proven ability to innovate on and off the field.
"Our existing coaching group is experienced and has an intricate understanding of the Crusaders' way. As a board, we are excited about Rob's ability to add to this group and guide both our coaches and our playing group to success."
New Zealand Rugby's general manager of professional rugby and performance, Chris Lendrum, said Penney was "a vastly experienced head coach who had proven himself throughout the coaching pathway in New Zealand including sustained success with Canterbury in the NPC and provides continuity after playing a part in the Crusaders' legacy as an assistant coach.
"He has Super Rugby and overseas experience, and is a great example of someone who has worked hard at his trade."