The Tasmanian had already called it quits from red-ball cricket, but will continue playing white-ball cricket in his home state this season.
Wade last played for Australia at this year's Twenty20 World Cup, with his final Test and ODI appearances coming back in 2021.
The 36-year-old will work with Andre Borovec, who is standing in for coach Andrew McDonald, when Australia begin their three-game ODI series against Pakistan next month.
Wade has already been coaching Tasmanian youth and second XI sides this year.
"I was fully aware my international days were most likely over at the end of the last T20 World Cup," he said.
"My international retirement and coaching has been a constant conversation with George (Bailey) and Andrew (McDonald) over the past six months.Â
"Coaching has been on my radar over the last few years and thankfully some great opportunities have come my way, for which I am very grateful and excited.
"I will continue to play BBL and the odd franchise league over the summer months, but around those commitments as a player I am investing heavily in my coaching."
Australia's national teams boss Ben Oliver hailed Wade's career, which spanned 36 Tests, 97 ODIs and 92 T20s.
Wade's defining moment in Australian colours came during the 2021 T20 World Cup.
"Matthew was a much-loved teammate in Australian teams across all formats over the past 13 years," Oliver said.
"His resilience and adaptability were a feature throughout his career, and he should be incredibly proud of the impact that he had at international level.
"We look forward to Matthew drawing on his wealth of experience as he transitions into coaching."
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