The 'Tahs finished bottom of the Super Rugby ladder this season, which led to the departure of coach Darren Coleman.
Raiwalui will be instrumental in finding his successor while helping revitalise the team.
"Simon has an excellent reputation internationally across the rugby world and we're thrilled to have secured his services until at least the end of 2027," said Waratahs chief executive Paul Doorn.
"He possesses elite experience across the three pillars of coaching, player development, and high-performance sport and will be a valuable addition to our club."
Born in Auckland, Raiwalui played lock for Newport, Saracens and French club Racing 92 and was capped 43 times by Fiji.
He subsequently became forwards coach of Racing Metro 92, followed by stints with Stade Francais and Biarritz before joining the Wallabies under Michael Cheika in 2018.
Raiwalui was appointed Fiji head coach in 2023, taking them to the World Cup quarter-finals.
"Waratahs fans are among the most passionate in the Super Rugby Pacific and whilst the season didn't go to plan in 2024, I'm confident that you'll see a vastly improved result next season," he said.
"I'm excited to get to work."
