Samantha Power, the former special assistant to the president and senior director for multilateral affairs and human rights, will be nominated to replace Rice at the U.N.
The selection of Rice comes despite heavy criticism over her comments following the terror attack last year in Benghazi, Libya, when she suggested in a series of Sunday show appearances that the violence had grown spontaneously out of protests over an anti-Islam video.
The White House later acknowledged that the incident was a planned terror attack and said Rice’s comments were based on then current intelligence assessments. Republicans, though, questioned if administration officials had sought to downplay terrorism ahead of the elections.
Rice had been considered a top candidate to replace Secretary of State Hillary Clinton, but later withdrew her name from consideration after intense Republican scrutiny.
Rice will not face a Senate confirmation hearing, so Republicans will have no say in her appointment as national security adviser.
Obama made no mention of the controversy in his announcement, simply praising his pick as "passionate and pragmatic" and noting she could throw "the occasional elbow."
In her comments, Rice said she was "deeply grateful" for the president's "enduring confidence" in her abilities.
For more on Obama's remarks, click here.