"One of the greatest fast bowlers of all time, Waqar Younis will be the bowling coach for SunRisers Hyderabad!" the team said in a tweet.
Younis was bowling coach of Pakistan and national coach till mid-2011.
Sunrisers, who took over the Hyderabad franchise from Deccan, have Tom Moody as their head coach and Kris Srikkanth as their team mentor.
Younis' wards in the Hyderabad team will include South Africa's Dale Steyn, Ishant Sharma, Clint McKay and Sudeep Tyagi.
The 41-year-old picked 373 wickets in 87 Tests. His ODIs tally read 416 in 262 matches.
Waqar is the second Pakistani bowling coach in the IPL, after his former new-ball partner Wasim Akram, who was with defending champions Kolkata Knight Riders.