Wilson last led Ireland at the ICC Men's T20 World Cup Qualifier 2019 in the United Arab Emirates, where Ireland finished third, confirming their spot in the T20I World Cup, which will kick-off from October 18, 2020, in Australia.
"Both Gary and the selectors believe that Andrew Balbirnie should have the opportunity to forge his leadership style and his standards across all the three formats," Andrew White, Ireland's chairman of selectors was quoted as saying by the ICC.
Meanwhile, Wilson, who led Ireland in 25 games after taking over the role in 2018, promised full support to Balbirnie and confirmed his commitment to as a player.
"It was an absolute honour to be asked to captain Ireland -- it was something that I dreamt about as a child. When I took on the job 18 months ago it was always the remit to qualify for the World Cup and re-assess from there.
"I'm very much looking forward to continuing as a player and working with Balbo in the future. I think it will prove to be a great appointment and believe that it is important that he, as a captain, has control of all three sides and gets to take it in a direction that he sees fit," Wilson expressed.