The AHL team's parent club, the Toronto Maple Leafs, made the announcement on Monday.
Keefe, 34, spent the last three seasons as head coach of the Ontario Hockey League's Sault Ste. Marie Greyhounds.
"As we went through this process, given our goal of finding an elite young coach to develop our prospects with the Marlies, it was clear to our management group that Sheldon Keefe was the best choice for our organization," Maple Leafs assistant general manager Kyle Dubas said. "For nearly a decade — since he arrived in Pembroke and through his time in Sault Ste. Marie — Sheldon has simply excelled at maximizing each players potential while coaching very successful teams at the same time.
"We feel we have a solid group of young prospects with the Marlies and we look forward to Sheldon leading them beginning with our development camp in early July."
Keefe earned both the 2014-15 CHL and OHL Coach of the Year awards after leading the Greyhounds to a league-best record of 54-12-0-2 and establishing a new franchise record with 110 points.
Prior to his tenure in the OHL he served as head coach and general manager of the CCHL's Pembroke Lumber Kings, capturing five straight league titles and a RBC Cup national title in 2011.
As a player, the Brampton, Ont., native played in 125 NHL games after being selected in the second round (47th overall) by the Tampa Bay Lightning in the 1999 NHL Entry Draft.