Montemurro has signed a three-year deal to coach Australia's women's national team until the conclusion of the Los Angeles Olympics in 2028, ending a 10-month wait to find a permanent replacement for Tony Gustavsson.
The 55-year-old Montemurro has previously coached in the A-League Women with Melbourne Victory and Melbourne City before winning titles in Europe with Arsenal, Juventus and most recently Lyon.
Montemurro's acquisition is a win for FA and finally ends months of uncertainty since Gustavsson's departure in the aftermath of Australia's group-stage exit at last year's Paris Olympics.
Matildas striker Caitlin Foord had accused FA of wasting time in their go-slow recruitment process given Australia will host next year's Women's Asian Cup in what shapes as the most likely realistic chance for the team's senior players to lift silverware.
Prior to taking the Lyon job last June, Montemurro was a free agent and even took charge of the A-League Women All Stars in a one-off match in Melbourne.
FA had the perfect opportunity to sound the Melburnian out but didn't and left the Matildas in a holding pattern under interim head coach Tom Sermanni.
"Twelve months ago Joe was appointed the All Stars coach and we were about to go into an Olympic Games," interim chief executive Heather Garriock said in Sydney on Monday.
"Respect is important for Football Australia and Tony Gustavsson was taking the Matildas to the games to win a medal, so I don't think it's a missed opportunity.
"Everything happens for a reason, and I believe this moment is now, and to have Joe with a French championship under his belt is only going to help the Matildas."
Garriock said "all good things come to those who wait" and described Montemurro's appointment as a coup for FA.
"We had a criteria going into the global search for a coach and every one of the criteria, Joe ticks," Garriock said.
"That's the reason why we have fought so hard to get Joe back to Australia because he's Australian, Australian-based, he loves football, he loves the nation.
"He wants to develop the next generation, and he knows how to win trophies."
Montemurro walked away from the final year of his contract with Lyon on Sunday to take the Matildas gig with the Asian Cup on the horizon.
"I can smell some success. So let's hope it goes that way," he said.
Montemurro was due to watch Monday's friendly with Argentina in Canberra before briefly returning to Europe.
Montemurro, who will base himself back in Australia, missed out to Gustavsson in 2020 but will finally get the chance to coach the Matildas starting with a series of friendlies against Slovenia and Panama in WA later this month.
"There was something inside of me that was just telling me, it's time," Montemurro said.
"I had to make a hard decision but I believe the decision standing here now is the right one.
"I know the pressure that comes with this job, I know the expectations, but I also know what needs to be done."
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