The Lions football manager has opted not to throw his hat into the ring to coach the AFL club in 2027 following Fagan's decision to step down after 10 seasons.
In grand final week, the 60-year-old Daly confirmed a desire to be a senior coach after previous interest from Gold Coast, Collingwood, Essendon, West Coast and Melbourne.
Daly, who joined the Lions as an assistant in 2015, will instead sit on the selection panel choosing the new coach, alongside Brisbane chair Andrew Wellington, chief executive Sam Graham and former Australian basketball coach Phil Smyth.
Fagan's unheralded right-hand man will also lead Brisbane's football program next season, accepting the elevated role of football general manager.
"Danny has decided not to pursue the senior coach role and will play a key role in selecting and supporting the new coach as the club enters the next phase," Graham said in a statement on Wednesday.
"We will now work through this process methodically and take the time required to identify the best person to coach our AFL team into its next chapter of sustained success."
Board member and former three-time Lions premiership coach Leigh Matthews will serve as an advisor to the board, who will be supported by club legend Simon Black and leading sports psychologist Matti Clements.
Black and Clements were involved in the process that led to Fagan's landmark appointment in 2016.
Fagan announced his retirement after leading the Lions to a third straight premiership with a stunning grand final win over Fremantle.
The 65-year-old had decided to quit weeks earlier, telling club hierarchy of his plans after the loss to Sydney that began Brisbane's finals campaign.
His successor will be aiming to steer the club to a four-peat, unseen in the VFL/AFL since Collingwood from 1927-30.
Current assistants Cam Bruce and Dale Morris have been spoken of as potential internal candidates.
Former Lions assistant Murray Davis, now football boss at Adelaide, Geelong coach and former Lions premiership player Chris Scott, former West Coast flag-winning coach Adam Simpson and Nathan Buckley have all been mentioned as potential outside options.
Brisbane said candidates would be assessed against clearly defined criteria, but did not specify what that entailed.
The panel will then make a recommendation to the board, with the Lions declaring they won't provide a running commentary while the process is under way.
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