Four days after Ewen McKenzie dramatically quit the job to plunge Australian rugby deeper into crisis after the Kurtley Beale texting scandal, the 47-year-old was handed a three-year contract as the third Wallabies coach in the last 15 months.
Cheika was the clear favourite for the job after leading the New South Wales Waratahs to the Super Rugby title last season, completing a unique coaching double after he guided Irish province Leinster to a Heineken Cup triumph in 2009.
The Australian Rugby Union (ARU) have agreed to allow him to see out the final year of his contract at the Waratahs, where he will oversee their Super Rugby title defence in 2015.
"Michael was the standout candidate and I'm delighted he is excited about this opportunity," Australian Rugby Union (ARU) chief Bill Pulver told a news conference.
"We believe that Michael is the man to lead Australia to victory in next year's World Cup."
Cheika, who never played for the Wallabies despite being a stalwart at the famous Randwick club, said he was humbled to be handed the job of coaching his country.
"I never imagined I'd be in this situation," he said.
"It's touching for me and it inspires to do the best that I can and to be top class, because that's what that position deserves.
"I'm going to have to work hard and learn quickly but I'm certainly up for that challenge."
The ARU was keen to appoint a coach before the squad departed on Friday for their tour of Europe, which features a match against the Barbarians and tests against Wales, France, Ireland and England.
OFFENSIVE MESSAGES
McKenzie quit a few hours before the Wallabies lost 29-28 to New Zealand in Brisbane on Saturday in the midst of a crisis caused by utility back Beale allegedly sending offensive text messages to a team official.
"It would be remiss of me not to acknowledge Ewen as well," Cheika added.
"In the mid 80s we played together for Randwick and he's done a lot for Australian rugby."
The affair caused two weeks of turmoil at the ARU and Beale still looks likely to have his contract torn up if he is found guilty of the charges at a Code of Conduct tribunal on Friday.
Cheika brought Beale back to New South Wales last season, where he excelled at inside centre for the Waratahs, in particular as a foil for prolific fullback Israel Folau.
"I won't be answering any questions about that because there's no way I want to prejudice what's going to happen with Kurtley on Friday," he said.
The ARU was keen to appoint a coach before the squad departs on Friday for their tour of Europe, which features a match against the Barbarians and tests against Wales, France, Ireland and England.
With Wallabies skipper Michael Hooper among a significant core of Waratahs players named in the 33-man Australia squad for the tour on Wednesday, Cheika will be confident he can reproduce the thrilling style of running rugby that lit up Super Rugby this year.
That Cheika is still the subject of a suspended six-month ban for abusing a TV camera-man on the sidelines of a Super Rugby match in South Africa in March is a reminder that he can be a volatile as well as effective coach.
Cheika admitted that he had clashed with ARU officials when "battling" for the interests of the Waratahs over the last couple of years.
"I won't make any excuses for fighting for my team, but now we're on the same team, it's important that we are united to do the best job for the Australian rugby supporters," he said.
"We want them to be extremely proud of their team, win, lose or draw.
"That's something's that's very important to me, that any team I'm involved in is respected and their supporters are proud of their performance every time they play."
(Reporting by Nick Mulvenney, Editing by Colin Packham)
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