Kataria (80) is expected to take over his new assignment in the next two-three days.
"I am grateful to UPA Chairperson Sonia Gandhi and the Prime Minister for appointing me as Lt Governor," Kataria told PTI.
A member of the Students Congress founded in Lahore, Kataria migrated to Punjab and did his graduation from Jalandhar and obtained his law degree from Delhi.
Supported by former Lok Sabha Speaker Balram Jakhar, he was made a member of the Rajya Sabha from Punjab in 1992.
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He held the post for about a year. Earlier, he was also general secretary of the Punjab Congress.
Kataria hails from a political family as his elder brother was part of the freedom movement and was jailed in Lahore.
Appointed as lieutenant governor of Puducherry in July 2009, Iqbal Singh was embroiled in a land controversy in the Union Territory.