"Vern is rightly regarded as one of the top coaches in the world and to have secured someone of his calibre is a coup," Scottish Rugby Union chief executive Mark Dodson said in a statement on Monday.
"He was our first choice and we are pleased to have secured him on a two-year contract taking us up to and beyond the Rugby World Cup in 2015. We compiled a short list of world-class candidates in December and Vern was top of that list."
The 51-year-old Cotter, who led the Canterbury Crusaders to successive Super 14 titles in 2005 and 2006, will honour his contract with Clermont and stay at the club until the end of next season.
He will assist temporary coach Scott Johnson during the November internationals and next year's Six Nations before taking over as head coach for Scotland's June tour.
"I'm absolutely thrilled and honoured to have been appointed," Cotter said.
"Mark Dodson and the team at Scottish Rugby have a strategic vision and a determination to do something very special ... and working with them and a talented group of players and coaches I look forward to the team growing in competitiveness and stature.
"We will build a winning team together."
Australian Johnson, who took over the team in November after Andy Robinson resigned, was appointed Scotland's director of rugby three weeks ago.