The Welsh Rugby Union (WRU) is pressing on with plans to cut the number of men's professional teams from four to three in 2028.
Davies has agreed a contract through to that year and has already bolstered a Scarlets squad that features seven players named in Wales' summer squad.
They have signed prop Corey Domachowski from Cardiff and brought in Cullen Grace from Crusaders and Isaac Murray-MacGregor from Canterbury.
Scarlets have also agreed fresh terms with influential forwards Fletcher Anderson, Josh Macleod and Sam Lousi along with former Wales scrum-half Gareth Davies.
Eamon O'Carroll will join from St Helens at the end of the Super League season as defence coach to replace Jared Payne while Aaron Dundon, formerly of Leinster, is the new forwards coach.
Davies, who had not been involved in professional rugby since leaving Gloucester in 2014, will call the shots.
"We have worked hard to strengthen our squad, build an outstanding coaching team and ensure every part of the rugby programme is aligned behind one clear vision," he said.
"That work is only the beginning. We understand the challenges ahead and the expectations that come with representing this club.
"I genuinely believe we now have a group of players, coaches and staff who are committed to building something our supporters can believe in and be proud of."
Scarlets start the 2026-27 URC season at home to Cardiff on Saturday, 26 September and then travel east for another derby at Dragons in round two.