Sharma, currently the charge d'affaires to Iran, will take up his new assignment in November, an official release said.
He will succeed Nicholas Hopton, who will be transferred to another post, according to a release on UK government's website.
Sharma has earlier served as the Foreign & Commonwealth Office (FCO) Head of Iran department and non-resident charge d'affaires to Iran.
Britain had reopened its embassy in Iran in August this year, four years after it was stormed and ransacked in November 2011 by activists angry over Britain imposing sanctions on Iran.