Since taking over from former skipper Trent Johnston in 2008, Porterfield has led the senior team 253 times, including when Ireland debuted as a test nation in May last year.
"It has been an incredible journey, and a fantastic honour to have captained my country over the past 11 and a half years," Porterfield said in a statement.
"To have been able to lead Ireland out at various World Cups, through to our first test against Pakistan, and again at Lord’s in the summer, have been but a few of these highlights."
Middle-order batsman Balbirnie will begin his tenure in January with a one-day series in West Indies. (Reporting by Amlan Chakraborty in New Delhi; editing by Toby Davis)