The position will also cover the many initiatives and projects arising out of the 'VISION 20/20' programme.
Terenure College chairman of rugby Michael Smith said: "The director of rugby role, we feel, is vital in ensuring we provide all our players with the necessary tools to develop as fully as possible as players and as individuals."
He added: "James Blaney will be the first team head coach. James has been assistant/forwards coach with Ian and the club are delighted James has agreed to take this role.
"James will be supported by an assistant/backs coach for which we are seeking applications presently. We wish Ian and James every success for the coming seasons."
Blaney, the former Leinster and Munster hooker, will be hoping to build on Terenure's seventh place finish in Ulster Bank League Division 2A this season.
The Dubliners won eight of their 15 league games, including their last three against Midleton, Instonians and Clonakilty.