The board includes the controlling shareholders F1 parent CVC..
Bernie Ecclestone has also rejoined the board after standing down during a now-resolved bribery trial in Germany and will continue as chief executive.
BERNIE TO STAY
Montezemolo, whose appointment will be effective from January 1 2015, was a non-executive director as Ferrari's representative from 1991-2014 but left the Italian sports car company in October 2014 as part of a major executive reshuffle.
CVC said Nestle chairman Peter Brabeck-Letmathe, who has been ill, would continue to serve as board chairman.
Walsh had been touted as a possible replacement for Brabeck, and ultimately Ecclestone, but media reports have indicated he wanted more of a say in running the business than Ecclestone was prepared to allow.