He replaces Michael Clarke, who suffered a serious hamstring injury during the first Test in Adelaide.
Steve Smith, 25, will become Australia’s 45th and third-youngest Test captain when the second Test starts in Brisbane on December 17.
“It’s something that I’ve always dreamt of doing,” he said.
“It’s an amazing thrill.”
Wicketkeeper Brad Haddin, who was expected to get the captaincy, has been named as vice-captain.
Chairman of selectors Rod Marsh said Steve Smith was highly regarded not just for his batting but and also his “maturity and clear leadership potential”.
Steve Smith, who has played just 23 Tests and has previously captained New South Wales, scored 162 not out and 52 not out in the recent first-Test victory over India in Adelaide.
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