English powerhouse St Helens confirmed on Friday that Walters would be their new coach on a three-year deal, with the Queensland legend to start immediately after this year's World Cup.
It means officials are again on the lookout for a successor, with Walters having only replaced Mal Meninga last year following his appointment to the Perth Bears.
The ARL Commission does not allow coaches to hold head-coaching jobs in the NRL while leading the Kangaroos, and it is expected that rule will also apply to the Super League.
Four-time NRL premiership-winning coach Ivan Cleary could be a good fit, as he has expressed an interest in the representative arena and would have finished at Penrith by the time Australia play again next year.
Brad Fittler had been in the race to replace Meninga last season, before withdrawing due to a short run into the Ashes and concerns about juggling media commitments.
Billy Slater could theoretically loom as an option, following his own shock decision to stand down as Queensland State of Origin coach last week.
But it would still take a stunning turn around for him to now take on the Kangaroos Test job, shortly after believing it was time to vacate the Queensland position.
Cameron Smith had also been floated as a contender for the Queensland role, before ruling himself out of the race on Monday night with the view he did not want to commit to a head-coaching role.
Walters himself had also only been linked to returning to the Maroons job earlier this week, with two of the biggest jobs in representative football now open.
"St Helens are one of the most iconic and successful brands in rugby league," Walters said in a statement.
"At the end of last year I was in England for the Ashes Series as the Kangaroos head coach.
"I witnessed first hand how tough, physical and skilful the English players were. I look forward to being a part of Super League in 2027 with the Saints."
Walters' appointment marks his return to full-time head coaching, after his controversial axing from Brisbane at the end of 2024.
He was brought in a short-term deal to coach the Kangaroos last year when Mal Meninga was appointed Perth's coach, before being handed a longer contract in May.
The news he will leave after the World Cup comes less than two months out from Australia's October 15 tournament opener against New Zealand.
Australia won't be in action after the World Cup until the end of 2027, giving officials ample time to find a replacement.
St Helens had been on the lookout for a coach since Paul Rowley's exit last month, with the Saints in seventh and two wins out of the finals with four games to play.
"We would like to place on record our thanks to the understanding and professionalism of Peter V'Landys and the ARL Commission in facilitating Kevin's move to us," Saints chairman Eamonn McManus said.
"Kevin's vast experience at both club and representative levels is self-evident.
"His motivation to succeed with the task at hand was both clear and compelling to us, as shown by the major career sacrifices that he is making in Australia to join St Helens.
"This is a major statement of ambition both by St Helens and by Super League."
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