Christine Lagarde, France`s former finance minister, takes over as head of the International Monetary Fund later, according to BBC.
The first woman to head the IMF, she was picked by its 24-member board.
The post became vacant after the resignation of Dominique Strauss-Kahn following his arrest in New York in May. He denies sexual assault charges.
Ms Lagarde beat Mexico`s Agustin Carstens to the job, receiving support from the EU, US and emerging market nations China, India and Brazil.
Announcing its decision last week, the IMF board said it had regarded both candidates as highly suitable for the job, but had decided on Ms Lagarde "by consensus".
Ms Lagarde takes the helm of the IMF at time of heightened global financial nerves, says the BBC`s Jonny Dymond in Washington.
The fund is up to its elbows in the Euro-crisis and directly involved in bailing out debt-stricken Greece, while keeping a close eye on other Euro-area countries in difficulties, he says.
Perhaps the first task of her five-year term will be to deal with the efforts of the IMF and European Union to resolve the Greek debt crisis and prevent contagion to other Eurozone economies.
In a television interview after her appointment, Ms Lagarde pressed Greece to move quickly to push through unpopular austerity measures that the IMF and EU had said were a prerequisite for further aid. Greece subsequently approved the measures.
But there are others worries too, adds our correspondent; the global economy seems badly off balance, with high inflation in China, sluggish growth in the US and Europe and a risk of overheating in some developing economies.
Although Ms Lagarde is the first woman to become managing director since the IMF was created in 1944, she maintains the tradition that the post is held by a European.
It has been convention that Europe gets the IMF, while an American gets the top job at the World Bank.
After her appointment, Ms Lagarde said her "overriding goal" would be that the IMF "continues to serve its entire membership".
"As I have had the opportunity to say to the IMF board during the selection process, the IMF must be relevant, responsive, effective and legitimate, to achieve stronger and sustainable growth, macroeconomic stability and a better future for all."
She also said she wanted to unify the IMF`s staff of 2,500 employees and 800 economists and restore their confidence in the organisation.
Before becoming France`s finance minister in June 2007, she was minister for foreign trade for two years.
Prior to moving into politics, Ms Lagarde, a former champion swimmer, was an anti-trust and employment lawyer in the US.