Williams will be in charge of developing the seasonal and home design trends.
The designer, who headed the creative direction at Habitat for four years, will put his energy into revamping the department, focusing on furniture, lighting and 3D design.
He will work with current design manager Mockie Harrison until her retirement in 2013. Peter Ruis, director of buying and brand at John Lewis said: “Theo is a heavyweight in the design industry, and his appointment shows our continued commitment to design, and ensuring that we bring the very best home offer to our customers.”
Habitat was bought by new owner Home Retail Group in June.
John Lewis has design collaborations with the likes of Clements Ribeiro, James Joyce and Ptolemy Mann.