The Ethiopian Football Federation (EFF) announced on Tuesday that the Portuguese will take over from Sewnet Bishaw who was sacked in early February.
EFF settled on the former Ghana coach from a shortlist of five coaches that had been drawn from the initial 27 who applied for the job.
Barreto coached Ghana between 2003-2004 then coached CS Maritimo between 2004-2005.
In 2005 he moved to Al Nasr, then moved on to Naval between 2006-2007.
Mariano then moved to AL Qudisiyah in 2011.
Sources at EFF intimated to supersport.com that should EFF fail to agree on the salary with Mariano, they would consider settling for Serbian Zoran Pilipovic.