She takes over from Bill Pulver, who quit in the fallout from Western Force being axed from Super Rugby.
Castle, a former boss of Netball New Zealand, has been tasked with unifying the sport after the protracted and acrimonious Super Rugby saga.
She beat more than 200 candidates, including highly-fancied former Wallabies captain Phil Kearns.
"Raelene is an extremely impressive executive who covered every base as far as what the board was looking for in a chief executive officer to lead our game into an important new chapter," said Rugby Australia chairman Cameron Clyne.
"She offers an incredible wealth of experience in sports administration and business, with an outstanding track record in commercial, marketing and communications roles."
He added that she would bring "a fresh set of eyes" to the challenges facing the sport.
Castle said she had followed rugby union closely for 30 years and was looking forward to developing and strengthening the sport.
"I am especially looking forward to getting out into the rugby communities across Australia and meeting the diverse range of people that make the game tick," she said.
The Australian-born Castle, who moved to New Zealand as a child, becomes the first woman to lead the national governing body and in doing also becomes the first female boss across all of the major national unions in world rugby.
New Zealand Rugby chief executive Steve Tew hailed her appointment as heralding "a new era for international rugby".
“We congratulate Raelene on her appointment, which is an acknowledgement of her strength as a leader, and her ability to drive success both on and off the field," he said.
"I have known Raelene for a number of years, and have a huge regard for her and we are really looking forward to working with her."
Source: AFP
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