Ponting, who retired from international cricket at the end of 2012, was bought for a base price of USD 400,000 during last months auction.
After Harbhajan Singh, who led Mumbai Indians last season, quit captaincy last month, there were rumours of Sachin Tendulkar being reappointed as captain ahead of the auction.
But mentor Anil Kumble alongwith coach John Wright and the team management decided to appoint Ponting as their team captain due to his vast experience.
"Ricky has a lot of experience to lead a competitive and a high-profile side like Mumbai Indians in the IPL. Sachin readily agreed to my suggestion that Mumbai Indians is best served when he leads the batting unburdened by the rigours of captaincy. It was our idea (Sachin and mine) to bring in Ricky as the captain of the Mumbai Indians," Kumble, chief mentor of Mumbai Indians, was quoted as saying in IPLT20.com
Ponting thanked the team management for having faith in him and is looking forward to lead the side in the upcoming IPL season in April.
"It's a huge honor and I thank Mrs Ambani and the Mumbai Indians management for the faith they have reposed in my abilities. Mumbai Indians has the potent combination of Indian and International cricketers and I look forward to leading the team to play to its full potential," former Australia captain Ponting said.