Members of the ruling party overwhelmingly approved 46-year-old Medvedev as their leader in a congress held in the Russian capital.
His election follows Putin's announcement that he was leaving the party post in favour of Medvedev, the latest in a string of attempts by the President to distance himself from a political party that is losing support of people, Ria Novosti reported.
Former President Medvedev was appointed Prime Minister on May 8 as part of a deal with 59-year-old Putin, who had been the leader of the ruling party since 2007.
The 13th congress of the United Russia party in Moscow brought together 670 delegates and 1,600 guests. Serbian President-elect Tomislav Nikolic and 30 foreign delegations attended the event.
On the eve of the Congress, Medvedev proposed sweeping reforms within the party to make its work more efficient and transparent.
"I don't think that anyone present here will argue that in five years when the next election to the State Duma (Parliament) is held... United Russia must be at the top again and win the parliamentary majority," Medvedev was quoted as saying after his election.
He said the United Russia should get rid of those who discredit it and encouraged the party not to be afraid of public debate with the opposition.