Vince, who was appointed Hampshire captain in 2015, will remain as club captain and continue to lead the side in limited-overs fixtures but Bailey, who returns to Hampshire on a two-year deal this year following a previous stint in 2013, will captain the side in the County Championship.
A club statement said: "The move will allow both batsman an opportunity to focus on their own games during a busy campaign, whilst still affording them the opportunity to contribute across each format with their leadership skills."
Vince is highly-rated as a captain, having led England Lions and The South in the pre-season competition in the UAE. But a disappointing 2016 season - both personally and for Hampshire - left him jaded and Hampshire have taken the decision to ease his workload a little while retaining his position within the club. He retains realistic England ambitions, too, despite a tough start to his international career and this decision may allow a little more time to concentrate on his own game.
Bailey, meanwhile, has captained Australia at international level and continues to lead Tasmania. Experienced, relaxed and at the stage of his career when personal ambitions are less likely to burden him, he should not only ease the burden on Vince but provide advice and support when appropriate.
"We are fortunate to have two excellent captains within the squad and a split between the formats seems a sensible option for us," Hampshire Director of Cricket, Giles White, said. "James will captain the white-ball teams and George the Championship side; this will allow them to channel their focus in the different formats which should benefit the squad as it looks to compete across all formats."
Bailey will not be available all season, though. He is expected to captain for the first time at Chelmsford on Friday 19 May and could also be absent in June when he could be involved in the Champions Trophy with Australia.