Delegates at a congress of the Party of European Socialists in Rome voted 368 in favour of Schulz's candidacy, with two ballots against and 34 abstentions.
"My first priority as European Commission president will be jobs, good jobs," Schulz, who is currently European Parliament speaker, said after the vote.
"I want to reduce the gap between rich and poor and between big countries and small countries," he said.
"We have lost optimism about out future. I want to put fairness back at the heart of our policies."
The former bookseller from Aachen in Germany who once dreamt of being a footballer is best known for facing down a Nazi jibe from Italy's then prime minister Silvio Berlusconi in a European Parliament debate.
Friends and foes alike agree on one thing when it comes to the stockily-built, bearded 58-year-old -- Schulz is a man of character and determination.
Outgoing and warm but tough too, Schulz does not mince his words, a charge sometimes made against current president Jose Manuel Barroso.
A dyed-in-the-wool pro-European, Schulz grew up just across the border from Belgium and the Netherlands.
After finishing Catholic school, Schulz opened a bookshop in a suburb of his home town until 1994.
He began his political engagement when he was just 19 by joining Germany's SPD Social Democrat party.
At 31, he became mayor of Würselen, the youngest ever to hold such a post in North Rhine-Westphalia, the most populous of the German states, and served for 11 years.
He was elected to the European Parliament in 1994 and his career in Brussels began to take off, becoming head of the SPD group of European lawmakers in 2000.
During a parliament debate in 2003, Schulz referred to "the virus of conflict of interests" in politics -- a barely veiled swipe at billionaire tycoon turned politician Berlusconi, provoking an infamous retort.
"Mister Schulz, I know a producer in Italy who is making a film about the Nazi concentration camps. I could see you in the role of a Kapo -- You would be perfect," Berlusconi said.
Schulz refused to respond in kind.
"My respect for the victims of the Nazis forbids me to respond," he said, immediately deflating Berlusconi's barb and winning plaudits for his restraint on such a sensitive issue.
In 2012 Schulz became speaker of the European Parliament, putting him on a par with Barroso and head of the European Council Herman Van Rompuy in EU ranking.
In his high-profile role as speaker, Schulz has travelled widely and brought in heads of state and other political leaders to address parliament, pushing for MEPs to have more say in running Europe.
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