In the full-time position based at the Sportsground in Galway, Duffy will be charged with driving new business with local, regional and national enterprise as well as continually developing and enhancing relationships with key stakeholders domestically and abroad.
The appointment is a boost for the province and comes at a crucial period in the westerners' development, with the recent confirmation of increased funding from the IRFU and the appointment of incoming CEO Willie Ruane.
Commenting on the appointment, Connacht's head of commercial & marketing Alex Saul said: "It is fantastic news for Connacht Rugby and the commercial team is greatly strengthened by this exciting addition.
"Gavin is one of Connacht's greatest ambassadors and has always demonstrated he has the skills and self-awareness to lead from the front. He will bring great insight and energy to the role as well as his outstanding leadership qualities from his playing career.
"As the Connacht Rugby brand continues to grow, there was appetite to bring someone with Gavin's qualities into the team to help us execute a business development strategy in line with the province's vision and values.
"Gavin demonstrated to us he had the drive and ambition to be a part of what we are doing here and I can't think of anyone better to help us shape our off-field efforts going forward.
"His deep knowledge of the sport and the industry combined with his commerce studies, as well as his tremendous passion for the province leave us in no doubt that he will make this role a success."
Duffy added: "Working full-time with the province I've been associated for so much of my life is ultimately the 'dream job'. There were other offers out there but I had to weigh up my options taking into account my family and where we wanted to be. But it wasn't a difficult decision when it came to taking this opportunity.
"Connacht is where I'm from and I've often spoke about the pride I felt playing for my home province. It's the same now that I've finished playing. I want to be a part of Connacht's future and to help it go from strength to strength.
"Being a professional player for so many years and in a team that has seen massive change in recent times, I have seen how crucial the off-field work is to the whole organisation.
"Having studied Commerce, I've always taken an interest in the commercial side of things and enjoyed getting to know our sponsors and stakeholders who do so much in terms of helping the province to grow.
"It's definitely going to be a new challenge for me moving into the 'real' working world but I'm excited by it. I'm really looking forward to getting stuck into the role and being a part of great success for the province."
The former full-back was involved in professional rugby for 13 years which included a three-year spell at English club Harlequins before he returned to his native Connacht where he played a total of 174 times in the back-three.
As captain, Duffy led Connacht in their first ever Heineken Cup campaign in the 2011/12 season and continued as skipper the following year.
Having played for Ireland at Schools, Under-21, Sevens and 'A' levels, the Ballina native earned the first of his 10 Irish caps against South Africa in 2004 and played against Argentina in the 2007 World Cup.
A former Mayo minor footballer who played in the 1999 All-Ireland Minor Football Championship final against Down, the 32-year-old has recently been called up to train with the Mayo senior football panel.