Matthews replaces dumped player-coach and former Irish international Mike Mullins, who spent four years with the side.
The 46-year-old was a halfback of note during the 1990s, playing more than 90 games for South Canterbury with brief stints with Southland and Canterbury.
He has enjoyed success with the Waitaki Boys High School First XV, and as assistant coach to Glenn Moore, who now coaches the Highlanders, with past North Otago teams.
"Obviously, I want to finish the Highlanders season before I get too involved with North Otago.
But it will be a good challenge," Matthews said.
"Hopefully, we can get North Otago up to where they were five or six years ago."
North Otago enjoyed a golden era under Moore.
The union won the old third division in 2002 and made three consecutive second division semifinals from 2003-05.
In 2007, North Otago won the Meads Cup, but the Old Golds were beaten in the semifinals in 2008, and last year had to be satisfied with the Lochore Cup after failing to qualify for the top tier of the Heartland Championship.
North Otago Rugby Union chief executive Colin Jackson believes the union has appointed the right person.
"Our minimum expectations are that we make the semifinals of the Meads Cup," Jackson said.
"Barry brings a lot of collateral coaching knowledge.
He worked with the team last year as a technical adviser and . . . has the credentials which we hope will take us forward."
Matthews has been appointed for the 2010 Heartland Championship and both parties will reassess at the end of the season.
His first assignment is to prepare North Otago for its Ranfurly Shield challenge against Southland in Invercargill on July 9.
"It's going to be huge," Matthews said.
"It will be a great couple of days for the guys, playing in front of a big crowd and playing for the Ranfurly Shield.
Hopefully, we can perform a bit better than what we've done in the last two challenges."
North Otago lost to Auckland 113-3 in 2008 and to Canterbury 85-24 in 2003.
Its closest challenge was in 1974 when it lost to South Canterbury 9-3.
North Otago challenged Southland for the shield in 1946 and lost 15-3.
These days, the gap between the top and lower tier sides has grown, and Jackson is not expecting miracles from Matthews in his first game in charge.
"For us, the Ranfurly Shield challenge is not about the result.
It is about how we perform on the day," he said.
