Gaffney's coaching career began at Sydney club Randwick in 1984 and has also seen him complete spells at Leinster and the New South Wales Waratahs.
He joined Munster in 2002 and helped the club twice reach the semi-finals of the Heineken Cup along with winning the Celtic League and Cup. He left Munster to join Australia as an assistant coach at the end of last season.
Ronan O'Gara, believes Saracens have made an inspired choice. "He is a fine coach, and his style is definitely not 10-man rugby. He will make a great difference to Saracens - they have got themselves a fantastic coach." said the fly-half.