He also has Super Rugby coaching experience with the Crusaders where he was assistant coach in 2005 when they won the Super 12 title and he has maintained his involvement with the Crusaders as their development squad coach.
A former Canterbury Academy manager, Penney will coach the New Zealand Under-20s for the defence of their IRB Junior World Championship title in South Africa next month.
The New Zealander is expected to arrive in Munster in mid-July for the start of a two-year contract.
Anthony Foley will continue on as Munster's forwards coach, while expected change in the rest of the management team will be finalised following consultation with the new head coach.
Commenting on the appointment, Munster CEO Garrett Fitzgerald said: "We conducted a thorough search to find a replacement for Tony McGahan and were delighted with the calibre of the candidates. Rob Penney's record speaks for itself and we look forward to welcoming him to Munster."
Canterbury Rugby Football Union CEO Hamish Riach commented: "Rob has been a great servant for Canterbury Rugby. We are very sorry to lose a talented coach, but this is a fantastic opportunity for him and we wish him all the best."