He will join a wider management team that includes his former team-mates Neil Doak (skills coach), Jonny Bell and Niall Malone (Elite Player Development officers) as well as David Humphreys (Operations Director) and Alex McCloy from Ballymena (video analyst).
As part of Williams' remit as head coach at Ulster Rugby, he is responsible for developing young local coaches, as well as players.
Commenting on Davidson's appointment, Williams said: "Jeremy has already got some experience in coaching locally from his time as head coach at Dungannon and has gained considerable experience at Castres over the past two seasons.
'When the opportunity arose to bring him back to Belfast, it seemed like a natural fit in terms of what we're trying to achieve here by developing our own local coaches for the future benefit of both Ulster and Irish rugby.'
Davidson will replace Steve Williams as forwards coach and Matt Williams thanked the Welshman for his contribution to the club.
"On behalf of Ulster Rugby, I would personally like to thank Steve for his contribution to Ulster Rugby over the past two years.
"He will be remembered by players, staff and supporters alike for the way in which he stepped up in the aftermath of Mark McCall's departure in November 2007.
"Despite having been at the club for less than six months at that time, he handled match preparation and team affairs with a purpose and professionalism that highlights his coaching ability.
"Steve commands respect from his colleagues and players alike, and both Ulster Rugby as a collective, and individual players have reaped the benefits of his input.
'This season we've seen players like Tom Court and Stephen Ferris break into the Ireland squad and hold down regular places, while Ryan Caldwell and David Pollock are knocking on the door.
"Steve will continue to be an important part of our team until the end of this season.
"After that, I have no doubt he will continue in a successful coaching career and we wish both him and his family the very best for whatever may lie ahead."
Davidson's move back to Belfast this summer will be the second time he has returned to the province from Castres. He did so as a player in 2001 after three years in France.
His playing career came to an unfortunate end after an accident on a fishing trip which saw him aggravate an old knee injury in May 2003.
After that he moved into coaching, first with Dungannon RFC in 2003, whom he credited with much of his early development, before returning to Castres in 2007 as forwards coach under former French full-back Ugo Mola.
Davidson's commanding lineout displays helped carve out his big international reputation.
Educated at Methodist College Belfast and the University of Ulster, he represented Ireland at Schools and Under-21 level before winning his first full international cap against Fiji in November 1995.
He played in all of Ireland's seven internationals during the 1996/97 season and in the summer of 1997 he played with the Lions on their successful tour of South Africa.
Davidson, who also had a stint in the early part of his career with London Irish, made his last Test appearance against Scotland in the 2001 Six Nations and in all, he won 32 caps for Ireland.
Shortly before his enforced retirement, he had begun to recapture the sort of form that had made him one of the country's outstanding athletes and a great servant of Ulster and Irish rugby.