Montemurro has signed a three-year deal that runs until the end of the Los Angeles Olympics in 2028.
The 55-year-old Australian, who was most recently coaching French giants Lyon, replaces Tony Gustavsson in an appointment which is long overdue.
Gustavsson did not have his contract renewed after last August's group stage exit at the Paris Olympics and since then the Matildas have been in limbo.
Football Australia had the chance to make a move on Montemurro, who missed out to Gustavsson in 2020, in the months leading up to the Olympics.
The Melburnian coached the A-League Women All Stars in May of last year when he was without a job.
He then signed a deal with Lyon six weeks out from the Paris Games at a time it was widely known Gustavsson had no genuine appetite to extend his deal.
The flow-on effect of FA's go-slow approach has been that the ageing Matildas squad have been treading water for the best part of a year.
The belated appointment of Montemurro has left Australia up against it heading into next year's Women's Asian Cup on home soil.
Interim head coach Tom Sermanni has done his best to keep the squad motivated through a series of friendlies that have only helped FA cash in on the popularity of the Matildas or in the case of a 4-0 defeat to Japan earlier this year, highlighted why next year's Asian Cup will not be a walk in the park.
Former Arsenal and Juventus manager Montemurro now has just a handful of international windows to put his stamp on the team.
He will take charge of his first game against Slovenia in Perth later this month.
Sermanni will sign off as an interim coach in Monday night's friendly with Argentina in Canberra.
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