Costello played senior rugby with Bohs for most of his career, featuring at out-half and centre. After leaving Bohs, he joined Kilfeacle as player-coach and spent two successful seasons with the Tipperary club before returning to Bohs.
He came in to work alongside forwards coach Christy Neilan, and success immediately followed. Bohs' first season back in Division One saw them finish fifth - just one place off the play-offs - but last season saw them go one better by finishing in the top four, only to lose out to Cork Constitution in a tightly-contested semi-final.
Commenting on Costello's appointment, Bohs' Chairman of Rugby Graham Burns said: "We are delighted to have someone of Ian's calibre and experience to take over as Director of Rugby. Ian brings a huge knowledge of both the game and the club through his experience of working with the players over the past two seasons. This continuity is vital as we look to continually develop the club both on and off the field."
Next season the club enters its ninth season after its merger with UL, and Burns added: "Our academy in UL is growing and Ian's experience of working with and nurturing young talent will be crucial to our development. We are always looking to strengthen our playing base, and see our Academy as being central to this process."