Former Limerick manager Kerley said he was delighted to take up his appointment at the club.
"Waterford United showed at the end of last season that the talent and the team spirit was there and I am looking forward to working with the team and backroom staff," he said.
"I have never managed a side in the Premier Division before and this is a fantastic opportunity and I can't wait for the season to begin.
"It will be a tough job and I am under no illusion about that but, as I said, the talent and team spirit are here and I will be working very hard to make next season a success for Waterford United."
Welcoming the new manager on board, Chairman Martin Colbert said that the club were very impressed with Kerley's pedigree in the game and his hunger to do well.
Said Colbert: "Mike made a fantastic presentation and he has a lot of experience in the game at all levels and I definitely feel he is the right man for the job."
Meanwhile, as was widely anticipated following his suspension for the play-off games against Dublin City, Roddy Collins was yesterday sacked by Shamrock Rovers.
In a brief official statement, the club said: "Following the conclusion of an internal investigation, the Shamrock Rovers FC board of directors has resolved to terminate the contract of Roddy Collins with immediate effect."
Collins reacted with dismay to the news.
"It leaves a sour taste in the mouth," he said.
"It is a sad end. I can safely say I put every ounce I had in me to try and keep the club in the Premier Division.
"It was disappointing enough that the club didn't stay up but then to be treated like this is, to me, morally wrong. And, legally, it's not right and I'm taking that up with my solicitors."
Asked on RTE Radio about the grounds put forward for his dismissal, including the allegation that he had left a Rovers-Pats game early, Collins said:
"I've heard that. I've heard I didn't go to a training session. I've heard I wanted 90 grand wages next year. I've heard the team wasn't fit enough. I've heard that the players didn't like me. I've heard that my coaching was crap a million different things. But I haven't heard it from the 400 Club. It would be helpful if someone could tell me one actual reason why I was sacked, but no-one seems to know."
Speaking yesterday evening, Collins added that he planned to drive immediately to Newry to enquire about the managerial vacancy at the Irish League club.
One manager who is not going anywhere is Dermot Keely. The boss of Dublin City who condemned Shamrock Rovers to relegation as they were promoted to the Premier Division is to stay with the club, despite having himself been recently linked with the Newry Town job.