Hussey, who succeeds Stephen Fleming, has signed a two-year deal with Stars, said the club in a media release.
After his appointment, Hussey said he was incredibly excited by the opportunity to lead the Stars.
"Stephen has done some remarkable things with this team over the period and I'll be looking to capitalise on this while bringing in some strategy and style of my own," said Hussey.
Hussey played 48 matches for the Stars, scoring 855 runs in seven seasons.
His elevation to head coach has also seen the 41-year-old step down from the Cricket Victoria Board, a position he has held since 2018.
Stars president Eddie McGuire said the club was impressed by Hussey's long and short-term vision for success as well as his commitment to building on the existing culture at the club.
"David is a quality person, a Melbourne Star through and through and someone we are extremely confident will help guide the club through its next exciting phase," he said.
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