Annegret Kramp-Karrenbauer, best known to Germans as “AKK”, will be appointed on Wednesday during a handover in Berlin with her predecessor von der Leyen and the first vice president of the Bundesrat upper house, which confirmed the news in a statement.
Von der Leyen, who had served as Defence Minister since 2013, is stepping down to become the first woman to hold the EU's top job after MEPs narrowly backed her in a Tuesday vote.
The surprise announcement for her replacement came after various media reports stated that Health Minister Jens Spahn was to take the Defence Minister position.
The news about Spahn, who was seen as a favourite to snap up the job, had been confirmed by the Bundeswehr (German army) and government circles – but a short while later, there was a shock change.
Some media reported Wednesday morning that Spahn did not want to take up the job, which is considered a tough gig.
The move has been welcomed in political circles. Thomas Strobl, Kramp-Karrenbauer's deputy in the centre-right party called it a “good surprise”.
Before Kramp-Karrenbauer, who is widely seen as the chancellor's chosen heir, was announced as the new minister, Merkel had said there would be a “very fast replacement”.
“The defence ministry, the defence minister, hold command and military authority. We cannot leave this post empty for long,” she said.
According to DPA, there are no other changes planned for the federal cabinet. Kramp-Karrenbauer is expected to take up the appointment around 11am on Wednesday. That means Merkel will welcome her favoured successor into the government team on her 65th birthday.
It will be the first ministerial post for Kramp-Karrenbauer, who was born in Saarland near the French border, and has become a leading figure in German politics – but not without controversy.
Sometimes called “mini-Merkel”, she has been poised to take over as chancellor since becoming CDU chief in December after Merkel announced she would not seek another term when her current one ends in 2021.
However the 56-year-old's appointment to the difficult post on Tuesday evening has come as a surprise to many, after she faced strong criticism for the CDU's poor results in May's European Parliament election.
It was also previously thought that Kramp-Karrenbauer would not go into Merkel's cabinet and instead concentrate on her task as CDU leader.