John Bartle, the founder of Bartle Bogle Hegarty, previously held the post, created three years ago under the stewardship of the former chief executive, Carol Fisher. Bartle resigned from the role earlier this year.
Baxter will become a member of COI's seven-strong management board, which includes the chief executive, Alan Bishop, and his deputy, Peter Buchanan.
She will act as an adviser on all matters ranging from the organisation of COI to ways of delivering effective communications and maintaining quality client services.
Baxter's COI role reunites her with Bishop following many years working together at Saatchi & Saatchi.
Bishop said: "Marilyn is a well-respected figure within the marketing communications industry. Her insight, experience and strategic thinking will be an asset to the organisation and I look forward to working with her."
Baxter has experience in the public sector and was employed by the National Economics Development Office early in her career.
She joined Saatchis in 1985. As the vice-chairman and executive planning director, she played a key role in the rebuilding of the agency following the departure of Charles and Maurice Saatchi.
But she is perhaps best- known in the ad industry for her work for the IPA and her two-and-a-half-year stint as the chairman of its Effectiveness Committee.
Baxter said: "Hiring non-executive directors is an interesting trend happening across government departments. I am very interested in effectiveness and I have tremendous respect for the work COI does. I hope my experience and fresh perspective will help it to maintain the high standard of work."
Non-executive directors can sit on the COI board for a maximum of three years with an option to renew the position at the end of the first year.