He said: "I see a move to Australia as a tremendous challenge for me. Australia is highly regarded around the world in so many different sports, and I have no doubt that this can also be achieved in football. The potential is limitless and I'm confident I can play a role in this.
McMahon is to take the position of head coach at Western Australia club Perth Glory, who are set to join a new Australian league in August 2005.
He added: "The offer came right out of the blue to be honest and everything has happened so quickly. I was on a shortlist of four or five before being offered the job and I had no hesitation in accepting.
"It wasn't that difficult a decision to make. My children are no longer school age so there's no problem on that front. I'll be going over on my own at first. My wife will stay in England to sort a few things out and then join me."