The former chief of the defence force will become Australia's man in Belgium, and ambassador to the European Union and NATO.
General Angus Campbell served as chief of the Australian Defence Force between 2018 and 2024.
Foreign Minister Penny Wong said this experience "will help deepen Australia's peace and security co-operation with NATO, both in the Euro-Atlantic and the Indo-Pacific".
It comes at a time of uncertainty for the NATO alliance as Donald Trump prepares to be sworn in as US president.
Mr Trump was critical of the trans-Atlantic alliance during his first time in office, wanting allies to increase their defence spending and flagging a potential change in American military posture.
Concerns now remain about what his presidency will mean for military aid in Ukraine as Kyiv continues to fight off Russia's invasion, largely backed by military contributions by the US and NATO countries.
Australia is one of Ukraine's largest non-NATO contributors with $1.5 billion on military aid, including giving tanks and armoured vehicles.
Australia continues to increase its co-operation with the alliance as part of the Indo-Pacific Four partners, which also includes Japan, New Zealand and South Korea.
Japan has announced a standalone mission to NATO, which was previously covered by its Belgian post.
Mr Campbell also takes on the posting as Australia works to secure a free-trade agreement with the European Union, with negotiations having previously broken down.
