Hesson, a career coach with no experience as a player at senior level, replaces John Wright who declined an offer to extend his contract earlier this year and will step down at the end of the Blackcaps' current tour of West Indies.
Hesson coached New Zealand A sides from 2008-11 and was head coach of provincial side Otago Volts from 2005-11.
He also had a short stint as assistant coach to John Bracewell at English county side Gloucester in 2009 and was head coach of Kenya last year.
"We were impressed with the way Mike presented himself and he was the stand-out applicant from a strong field of candidates," NZC director of cricket John Buchanan said.
"He will bring a freshness and new energy to the side and we know he is more than capable of developing and growing the team as we work towards the ICC Cricket World Cup 2015."
Hesson will join the team for their upcoming tour of India in August and September for two Tests and two Twenty20 internationals.
New Zealand lost both their Twenty20 matches and their one-day series 4-1 to West Indies. The teams start a two-match Test series in Antigua next week.