Montoyo received a three-year deal through the 2021 season with a team option for 2022. He will be introduced at a news conference Monday.
Montoyo, 53, has been with the Rays since their inaugural season in 1998, serving as a manager at various levels of the franchise's minor league system. He was brought up to the major league team as a third-base coach in 2015 and served as the Rays' bench coach for Kevin Cash this past season.
"I'm extremely honored and humbled to join the Toronto Blue Jays organization," Montoyo said in a statement. "... Managing a team that represents an entire nation is incredibly special. My family and I look forward to working towards the ultimate goal of winning a championship for this city."
Also on Thursday, the Twins hired Rays field coordinator Rocco Baldelli to be their new manager.
Montoyo replaces John Gibbons, who parted ways with the Jays after the 2018 season -- his second managerial stint with the team.
"Charlie is a highly regarded leader by so many individuals in the game, and we were thoroughly impressed by his experiences and approach as we learned more about him during the interview process," Blue Jays general manager Ross Atkins said. "Charlie is passionate about the game, with a superior ability to connect and relate, and we are confident he will have an overwhelmingly positive influence on the Blue Jays players and staff."
The Blue Jays finished with a 73-89 record, fourth in the AL East.