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The 42-year-old will spearhead a new era at the National League club, who have also appointed ex-Wealdstone boss Dean Brennan as their new director of football.
Kewell succeeds interim manager Simon Bassey after Tim Flowers left the Barnet job in March.
He has been out of work since being sacked by League Two side Oldham manager in March.
Barnet finished 22nd in the National League last season but were spared relegation after it was scrapped because the National League North and South seasons were declared null and void.
Kewell, who won the Champions League with Liverpool in 2005, said: “Barnet is a fantastic football club but we need to get the club back on the right path and get going back in the right direction.
“The chairman and myself have put a really exciting backroom team together, with the view of a collective unit being the driving force behind a successful future for the football club.
“That starts with me as a head coach, but also with all of the staff, players and of course the supporters, we need to be a collective group with the ambition of bringing brighter days back to this incredible club.
“There’s plenty of hard work to do to get us going in the right direction and I can’t wait to get started!”