Baxter replaces Alexandre Revoredo, who passed away at the age of 57 in August 2017 after a short illness.
Lee, who is Stuart Baxter's son, takes over from interim goalkeeper coach Brian Baloyi, with immediate effect.
Baloyi returned to work with the first team following the passing of Revoredo last year, but Baxter's appointment means the former Amakhosi captain will have to return to the club's development to work with younger goalkeepers.
The Soweto giants confirmed Baxter's appointment on Monday night, a few hours after beating Golden Arrows in the Nedbank Cup Last 32.
Lee Baxter new goalkeeper coach— Kaizer Chiefs (@KaizerChiefs) February 12, 2018
Kaizer Chiefs have appointed Lee Baxter as the new head of the goalkeeper coaching department. “I am looking forward to the challenge,” he comments after having signed a contract that runs until the end of the 2019/2020 season. #KCOneTeam pic.twitter.com/AYu9Flqp6z
Amakhosi football manager Bobby Motaung took the opportunity to welcome Baxter into the first team, saying the club expects him to use his international experience to produce more talented goalkeepers in future.
"We welcome Lee into our Kaizer Chiefs Family. Coaching goalkeepers is a very specialised field. Lee is young, ambitious and he will bring a lot of international experience," Motaung told the Amakhosi website.
"Roping Lee in is part of the bigger picture of developing goalkeepers for the future. We are looking forward to this partnership which will take our youth development structures to greater heights," he concluded.
The Glamour Boys are renowned for producing talented goalkeepers from their development, and Baxter will be expected to raise the bar even higher now that he's in charge of the goalkeeping department.