The agency won the brief following a competitive pitch handled by ISBA and head of communications, brand and corporate promotion at BAE Systems, Annette Meadows.
Rainey Kelly Campbell Roalfe/Y&R handled much of BAE Systems' advertising in the UK but declined to take part in the review which began in November last year.
It has now opted to sever all ties with the defence, security and aerospace company.
M&C Saatchi will lead the work out of the UK, which will be adapted globally.
BAE Systems' last major ad campaign first started two years ago and aimed to inform opinion-makers about the scope of the global defence contractor's operations in the UK.
It targeted the political and customer community, investors, suppliers, industrial partners and the company's employees. The campaign also aimed to overhaul BAE Systems' image after it faced corruption charges.