Former Australia coach Jones was himself relieved from his England coaching duties in December and had been in talks with Rugby Australia for a return in some capacity.
Rennie last week told media Jones would have no involvement with the side at this year's World Cup while also denying he had signed a deal to coach in Japan once his contract expires at the end of this year.
But on Monday Rennie was released from his duties, Jones set to take up a five-year deal - 18 years after he last held the role - while also take on the women's Wallaroos job in a "world-first" appointment.
He'll begin on January 29.
"It is a wonderful opportunity for me to be able to come home to Australia and lead my nation to a Rugby World Cup," Jones said.
"It is going to be an immense period for Australian Rugby – as a proud Australian, it is a great honour to be able to come home and lead the national team during these years.
"The Wallabies squad is a really talented group of players with good depth – if we can have everyone fit and healthy going into the World Cup this year, I am confident that we can go to France and break the 24-year drought of winning the Rugby World Cup.
"I saw how gutsy the Wallaroos were in the Rugby World Cup in New Zealand last year – it looks like there is a real spirit in that group that will drive the women's program forward ahead of their next World Cup in 2025.
"I am really looking forward to getting back home and getting stuck in."
Rennie finishes with a winning percentage of 38, the lowest of any Wallabies coach who has overseen at least 30 Tests.
Conversely, Jones was sensationally sacked despite an England-best 73 per cent winning ratio as coach.
The lengthy deal will see Jones at the helm during the Wallabies' home series against the British and Irish Lions in 2025 and 2027 World Cup in Australia.
"It is a major coup for Australian Rugby to have the best coach in the world return home to coach the iconic Wallabies and to oversee the Wallaroos program," RA Chairman Hamish McLennan said.
"Eddie's deep understanding of our rugby system and knowledge of our player group and pathways will lift the team to the next level.
"Eddie instinctively understands the Australian way of playing rugby – this represents an opportunity to secure a coach of immense expertise and experience at the biggest competitions, and we did not want to miss it."
RA chief executive Andy Marinos credited Rennie for building the squad's depth after the New Zealander was hit hard by key injuries during his tenure.
"The work ethic, the spirit within the group, and the way the team carries itself are all a direct result of Dave's input," he said.
"He has made a real mark on this group of players."
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