The 38-year-old had been expected to take the reins at Fratton Park following the dismissal of Guy Whittingham last month.
Along with the arrival of Barker, the club have announced that Steve Coppell has joined them from Crawley Town as director of football.
"This is a fantastic opportunity for me," Barker told the club's official website.
"I'm very excited to be at this club with its great history. Everyone knows how passionate the people of Portsmouth are about their football club."
Coppell added: "It's a new challenge for me and I'm very excited. Richie asked if I'd like to be involved and I jumped at the opportunity."
Barker, who was sacked by Crawley in November, has signed a standard rolling contract.