The upper house public accountability committee will examine the circumstances leading to Mr Barilaro's appointment as senior trade and investment commissioner to the Americas.
It will look into the process, probity and integrity measures undertaken, and any other matter related to his appointment.
The first hearing is set to be held next week.
Mr Barilaro has been blocked from beginning the role until the inquiry concludes.
The parliamentary inquiry will run separate to a review headed by Department of Premier and Cabinet secretary Michael Coutts-Trotter, with a report provided to Premier Dominic Perrottet.
"I will review it and I will make it public," Mr Perrottet said on Thursday.
The premier and senior government ministers have defended the appointment of Mr Barilaro as the result of an independent process, with Mr Perrottet telling parliament on Wednesday it would have been unlawful for him to intervene.
Mr Perrottet said he'd been informed an initial recruitment process had not identified a suitable candidate and a second was undertaken, led by a third-party recruiter.
The opposition has told parliament the role was offered to former Investment NSW trade and international deputy secretary Jenny West, but the offer was rescinded and she was paid a settlement.
Mr Perrottet said that decision was made by Investment NSW chief executive Amy Brown, who used to report to Mr Barilaro.
"She will be able to explain the basis of her decision-making," Mr Perrottet said.
Greens MP Cate Faehrmann will chair the inquiry with Shooters, Fishers and Farmers MP Robert Borsak as deputy.
Three government members and two from the Labor opposition will also be on the committee.
