He will replace outgoing CEO Matthias Müller, who was appointed in 2015 shortly after the so-called “dieselgate” scandal broke and plunged the former paragon of German industry into the biggest crisis in its history.
Originally contracted to serve until 2020, Müller was stepping down “by mutual agreement, effective immediately,” VW said in a statement.
“There will be a number of changes on the board of management,” the statement said.
“At its meeting on Thursday, the supervisory board appointed Herbert Diess as his successor.”
VW also said works council executive Gunnar Kilian would replace Karlheinz Blessing as human resources chief.
And the CEO of subsidiary Porsche, Oliver Blume, will join the VW board.
More details are expected to be revealed at a press conference at VW's Wolfsburg headquarters Friday at 10:30 am (0830 GMT).
Müller had attempted to right the ship after VW admitted to installing software in 11 million diesel vehicles worldwide designed to cheat regulatory emissions tests.
He steered the mammoth carmaker into a massive restructuring, aiming to offer electric versions of many of its models and slim down its operations, but also landed in prosecutors' sights over suspicions he may have known about the cheating before it became public.