Upton, who is currently serving as mental conditioning coach of South Africa team, will be with the Royals for the sixth edition of IPL this year. Upton will replace Monty Desai.
The 44-year-old Upton was with Gary Kirsten during his India coaching stint and was also part of the 2011 World Cup winning support staff.
"It is indeed an honour for me to coach a dynamic team like Rajasthan Royals. It will be wonderful to work with Rahul Dravid once more. The team has some very talented players who have been noticed by the cricketing fraternity because of their phenomenal attitude and undying team spirit. Going into the new season, I am looking at instilling fresh confidence into the team," said Upton in a statement.
Royals' captain Rahul Dravid said: "I have worked with Paddy in the past and greatly respect him for his knowledge and professionalism. We welcome him to Rajasthan Royals and look forward to working with him in the coming months."
Rajasthan won the inaugural edition of IPL in 2008 under Shane Warne's captaincy.