The review will be led by David Wheeler, the president of Cape Breton University and an expert on water quality and groundwater pollution.
Energy Minister Charlie Parker said Wheeler will hold public consultations and assemble an advisory panel of experts to study the social, economic, environmental and health impacts of hydraulic fracturing, also known as fracking.
The government launched its own review in 2011, but Parker said Wednesday that Nova Scotians have been calling for an external study.
"They want more independence and they want an expansion of the scope of the study," he said.
"So we're not only looking at the technical aspects of hydraulic fracturing, but expanding it into the health impacts and the socio-economic impacts."
Fracking involves extracting natural gas trapped in shale rock through the use of chemically treated water and sand into a well bore. Critics say the process could compromise groundwater, but the energy industry says fracking is safe and does not harm the environment.
The Nova Scotia government implemented a two-year moratorium on hydraulic fracturing last year. At the same time, the NDP announced it would delay its fracking report, initially expected last spring, until mid-2014 to allow for more study.
Parker said work from the internal review will be incorporated into Wheeler's work, which is expected to begin this fall.
"There's a lot of good information there but we still don't have enough information to make an informed decision," said Parker. "We want to do the right thing. We've always said we want to gather the best possible information."
The Opposition Liberals called for an independent review of fracking in 2011 and accused the NDP of bowing to mounting public pressure ahead of a provincial election.
"They have shown absolutely no leadership on concerns about fracking in our province," energy critic Andrew Younger said in a statement.
Parker said the government is aiming to have the independent review completed next year. He said no applications for fracking will be considered during the review process.
He estimated the cost of the independent review at $100,000. About $100,000 has already been spent on the internal study, he said.
Fracking is also a hot-button issue in neighbouring New Brunswick, where opponents have staged high-profile protests against shale gas exploration.
Earlier this year, the provincial government pushed ahead with dozens of new regulations governing the industry and aimed at protecting the environment and creating jobs. That came after that province's chief medical officer of health issued a report in October 2012 warning that New Brunswick's infrastructure and legislation weren't strong enough to ensure public health is protected should the shale gas industry be expanded.