Karmarama won the business following a pitch against MCBD, Swarm (Y&R's conlict shop) and McCann Erickson Manchester.
The pitch process, which kicked off in March, was handled by the AAR.
Karmarama will initially work on the national launch of Plusnet, as it moves from being a regional internet service provider to a national brand providing broadband across the whole of the UK.
The agency will create a number of campaigns to raise the profile of Plusnet, help attract new customers and build stronger relationships with their existing customer base.
Plusnet's advertising has previously focused on digital and outdoor and it has worked with various shops on a project basis, such as Chemistry and Twentysix Leeds.
Nick Rawlings, the commercial and marketing director at Plusnet, said: "Throughout the pitch process Karmarama demonstrated real creativity and vigour in conveying an understanding of our business and the challenges at hand. We're delighted to be working with them."
Plusnet was founded in 1997, and now provides home phone and broadband services to more than 200,000 customers across the UK.
The Sheffield-based company was bought by BT in January 2007.