In a statement, the president-elect praised Rex Tillerson, 64, as among the “most accomplished business leaders and international dealmakers” in the world.
Rex Tillerson is said to have a good relationship with Russian President Vladimir Putin, alarming both Democrats and some Republicans.
The nomination needs Senate approval.
The secretary of state is in effect the most senior US diplomat, responsible for enacting the government’s foreign policy.
Under a Trump presidency, his in-tray could include everything from handling rows with China to revisiting the nuclear accord with Iran.
According to new reports, Donald Trump has also selected former Texas Governor Rick Perry as his Energy Secretary.
Rick Perry, 66, famously forgot the name of the energy department during a cringe-inducing gaffe at a 2011 Republican primary debate, when he said it was among the agencies he would eliminate if he was elected president.
He has also been a vocal critic of Donald Trump, calling him a “barking carnival act” and a “cancer on conservatism” before he dropped out of his second bid for the White House in 2015.
Donald Trump said: “Rex Tillerson’s career is the embodiment of the American dream.
“His tenacity, broad experience and deep understanding of geopolitics make him an excellent choice for secretary of state.”
Rex Tillerson said he was “honored” by the nomination, adding that he shared Donald Trump’s “vision for restoring the credibility of the United States’ foreign relations and advancing our country’s national security”.
The announcement had been widely expected, with Rex Tillerson favored over high-profile Republicans, including the party’s 2012 presidential nominee, Mitt Romney.
Although he has no formal foreign policy experience, as Exxon CEO Rex Tillerson oversees a company with 75,000 employees and business activities in more than 50 countries.
He has warned of the “catastrophic” impact of unchecked climate change, although his company has been accused of deliberately misleading the public about the role of fossil fuels in global warming.
However, it is Rex Tillerson’s connections to Russia that have drawn most flak.
He has forged multi-billion-dollar deals with Russia’s state oil company, Rosneft, spoken out against international sanctions imposed on Moscow and in 2013 was awarded an Order of Friendship by the Kremlin.
As rumors of his nomination gathered pace in recent days, one of Donald Trump’s rivals for the Republican nomination, Marco Rubio, said being “‘a friend of Vladimir is not an attribute I am hoping for from” the next secretary of state.
Another Republican Senator John McCain expressed concern over Rex Tillerson’s links to Vladimir Putin but promised he would get a “fair hearing” in the Senate.
Reacting to the nomination, Vladimir Putin’s foreign policy adviser, Yury Ushakov, said all Russian officials and not just the president enjoyed “good, businesslike relations” with Rex Tillerson.
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