Iley arrives at the Norfolk-based team from McLaren, where he was head of aerodynamics.
He previously worked with Lotus' technical director Mike Gascoyne at both Jordan and Renault before moving to Ferrari and most recently McLaren.
Iley will start his new role in June next year owing to his contractual commitments to McLaren.
Iley's new post will see him head up all aerodynamic and CFD work at Lotus, which will be rebranded as Caterham from the 2012 season.
"We are absolutely delighted that John has taken up the challenge we have offered him, to help take us to the next level on and off track in one of the key areas of performance in Formula One," Caterham Group chief executive Riad Asmat said.
"It is a real sign of our growth and development as a serious contender for long-term honours that we can attract someone of John's calibre and we are all very excited about the contribution he will make to our future success from the moment he starts work with our team."