Williamson replaces Australian David Warner who has been handed a one year ban by Cricket Australia (CA) in light of the ball-tampering scandal.
"I've accepted the role to stand in as captain for this season. It's an exciting opportunity with a talented group of players. I look forward to the challenges ahead," Williamson said in a statement.
This update comes close on the heels of Rajasthan Royals replacing Steve Smith with Ajinkya Rahane as captain. Smith, too, will not be participating the IPL 2018 having received a one year ban from CA.
Williamson's appointment on Thursday means he'll be the only foreign captain in the IPL this year. The T20 tournament begins in Mumbai on April 7, with defending champions Mumbai Indians taking on Chennai Super Kings at the Wankhede Stadium in the opening clash.
With New Zealand's build-up to the second Test against England, starting in Christchurch on Friday, overshadowed by international reaction to the cheating affair in South Africa, Williamson said he has been in touch with Warner.
"It's a shame. The act is not condoned in any team," Williamson said after Warner was named as the instigator of the ball tampering. "It will blow over in time, but it's grown and grown and, like I say, he's not a bad guy. He's made a mistake and certainly admitted that and they are disappointed with that action.