Sydney FC coach Arnold will return to the helm of the national team for a second time after the World Cup in Russia, where Dutchman and former Saudi Arabia coach Bert van Marwijk will oversee Australia's fourth successive appearance.
Arnold, who won the A-League title last season, will look to add back-to-back trophies to his collection this term before leaving Sydney, with the Sky Blues eight points clear atop the table with five matches remaining in the regular season.
"It is a very great honour to coach your national team," Arnold said. "It's a job I have always been interested in doing and I believe the timing is perfect for me.
"I am deeply grateful for the trust that chairman Steven Lowy, the FFA board, David Gallop and Luke Casserly have shown in me. They have my total commitment and when July comes I look forward to beginning work on our defence of the Asian Cup.
"Until then I remain totally focused on my current team and playing group at Sydney FC. It has been a tough decision to leave the club and I am determined to repay all of the support I have been given with more silverware in my final season. After today I won't be saying any more about the Socceroos until after the World Cup out of respect for Sydney FC and out of respect for Bert van Marwijk.
"I said at the time that I thought he [van Marwijk] was a great appointment to lead the Socceroos in Russia and everything he has done since has reinforced that view. I won't be getting under his feet but I will be cheering him and the team on from the stands."
The 54 year-old was heavily linked with the Socceroos job before and when Ange Postecoglou's tenure came to a premature end after the country's successful World Cup play-off against Honduras in November.
Arnold – capped 54 times at international level – is no stranger to the national team, having briefly taken charge of the Socceroos after Guus Hiddink's departure in 2006 – overseeing a disappointing 2007 Asian Cup campaign.
Before Arnold steps into the hot seat, Van Marwijk and the Socceroos must prepare for the World Cup.
A pair of international friendlies against Colombia and Norway this month will be followed by their World Cup Group C opener against pre-tournament favourites France in Kazan on 16 June.
The Socceroos will also go head-to-head with Denmark (June 21) and Peru (June 26) for a place in the knockout round.