Williams, who played for Collingwood from 1991-2000 and the Sydney Swans from 2001-2006, will be responsible for the forward line following the departure of former assistant Wayne Campbell back to Richmond.
He will be reunited with former Swans’ coach Rodney Eade, who he played under in Sydney.
"Rodney and [football manager] James Fantasia approached me, and I sat down with those guys and Leon Cameron last week, and we had a long chat and went on from there," Williams told afl.com.au.
“Rodney lured me from Collingwood initially when I went to Sydney and I've had a really good working relationship with him; playing under him.
"I'm keen to do the same as a coach. We have always gotten along very well so I'm keen to get in there."
Williams was a dual best and fairest winner at the Swans, and played in the 2005 premiership side. He became the midfield coach of Melbourne in 2007.
Eade said Williams would start his two-year contract in early November. "Paul will be a welcomed acquisition who brings a great work ethic and knowledge of the game," he said.
Williams said he was looking forward to taking on the responsibility of nurturing a forward line, and working with an up-and-coming side.
"Obviously their year this year was very good, and while I know myself that doesn't guarantee any certainty for next year, their list is very exciting and young and something I'm looking forward to working with," he said.
"I'm moving to the forward line, and they were the second best forward line last year so I don't think we need to change a hell of a lot, but I've got a few ideas that I'll bounce off the rest of the guys when I do start.
"Basically I think I'll be running with a lot of the things Rodney wants to go with, and we'll have a chat when I get in there.
"I'm really keen to work with all those guys; the younger ones and the older ones I've played against for a lot of years. There's a really nice mix, and I'm keen to work alongside Leon and Peter Dean as well.
"There's a lot of upside for me and I'm just really excited to get down there and get my hands and knees dirty and get into it."
