Bailey, 35, currently coaching the Argentine national side, will turn out for Carlton as a batsman and succeeds Steve Gilmour, who has joined the staff at Merchiston Castle School.
Carlton skipper Fraser Watts said of a man whose 1324 first class runs from 52 matches included one century: “His appointment says a great deal about our aspirations. Toby comes with a wealth of experience both on and off the pitch and I am sure he will help push the club, and in particularly the coaching set-up, to a new level.”
Bailey, who also played 73 one-day matches for Northamptonshire and captained the MCC on a tour to Mozambique in 2009, will visit Edinburgh next month to meet team-mates and finalise plans.
Carlton are expected to start favourites for the new East Region Premiership in 2012.