Furner played for the Rhinos in 2003-2004, and will return to the club after two years at the Rabbitohs.
The 47-year-old previously coached the Raiders between 2009-2013.
“First of all, it is fantastic to be heading back to a club where I have so many fantastic memories from my playing days,” Furner told therhinos.co.uk.
“I would like to say thank you to the Board of Directors, Gary Hetherington and Kevin Sinfield for offering me this opportunity and I am looking forward to helping the club progress in the future.
“I know that Kevin and the team are working hard to get through the Qualifiers at present and I have every confidence they will do that with the backing of the fantastic fans at the Rhinos.
“I have had two wonderful seasons at the Rabbitohs and this was not a decision that I took lightly.
“Returning to England is something my family and I are excited about come the end of the season, in the meantime, I am looking to finishing my time at South Sydney in the best possible fashion and wish Kevin and the team good luck for the remainder of their campaign starting on Sunday at Widnes.”