Ms Mayer will become the firm's third chief executive in the space of a year.
In a statement released by Yahoo, Ms Mayer said she was "honoured and delighted" to lead the company.
The appointment comes after a difficult year for Yahoo. In May CEO Scott Thompson had to step down after accusations that he put a fake computer science degree on his CV.
Interim CEO Ross Levinsohn was thought to have been the favourite for the job.
In September 2011, CEO Carol Bartz was fired after two-and-a-half years in the post.
Yahoo has struggled in the face of increased competition from rivals such as Google and Facebook.
Source & Image : BBC
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