Baraclough, 46, takes over from Jim Magilton, who remains the Irish Football Association's elite performance director.
The new under-21 manager moves into the post after leaving his role as assistant to Oldham boss John Sheridan.
"I am looking forward to working with young players in Northern Ireland," said Baraclough.
"I will be aiming to help the team be successful in qualifying and also to help develop future senior internationals."
Baraclough had a 20-year playing career which saw him play for QPR, Notts County and Scunthorpe United.
He became Scunthorpe manager in 2010 before moving to Sligo Rovers two years later, where he guided the Irish club to the League of Ireland title plus FAI Cup and Setanta Cup triumphs.
After being appointed Motherwell manager, he kept the club in the Scottish Premier League and was then handed the Oldham assistant's role after departing from the SPL outfit.
Northern Ireland senior manager Michael O'Neill said Baraclough would be a "great addition to our international coaching team".
"We were looking for a candidate with good coaching and management experience and Ian certainly fits the bill given his previous roles as both a manager and assistant manager," said O'Neill.
Northern Ireland's Under-21s have never progressed to a European Championship Finals and finished last in their previous qualifying group after picking up only two points from 10 matches.
Baraclough's Under-21 side have have been drawn with Albania, Estonia, Iceland, Slovakia and Spain in their 2019 UEFA European Championship qualifying group.
The Northern Irish begin their campaign against Estonia in Tallinn on 8 June.
Former Motherwell and Sligo Rovers boss Ian Baraclough has been appointed the new Northern Ireland Under-21 manager.