The 58-year-old is to work alongside Wallabies boss Eddie Jones, after accepting an offer from the Australian Rugby Union (ARU).
The former Leinster assistant coach announced the news to his current Munster players yesterday, and added: "I had anticipated being here a while longer, so yes, it will be a wrench to leave it all behind. However, I think everyone here (Munster) understands the decision I made.
"I feel deeply honoured to have been asked to assume the role in question, and I am looking forward to the challenge.
"What needs to be done right now is to concentrate on the job in hand. We are still in contention for the Celtic League title - there is the Celtic Cup - and, of course, we are just a month away from the Heineken Cup quarter-final against Biarritz."
Munster CEO Garrett Fitzgerald commented: "We had hoped that Alan would extend his contract with us for a further period.
"His three years with us have been hugely beneficial - and we do, of course, regret losing a coach of his ability, one who has served Munster rugby so well."However, we fully understand his decision to accept the offer from the Australian Rugby Union. It is a tremendous honour for him, and we wish him the very best of luck in his new role."
The challenge of finding the Australian's successor begins this week, with current Connacht coach Michael Bradley and Munster assistant Brian Hickey touted as the favourites for the vacant role.