Araujo, a former health minister, replaces former guerrilla leader Xanana Gusmao, who resigned last week ahead of an expected restructuring of the government to make it more inclusive.
The presidential office said Araujo was picked after talks between President Taur Matan Ruak and parties with seats in Parliament. It said Araujo was nominated by Gusmao's National Congress for the Reconstruction of East Timor, which holds 30 seats in the 65-member assembly.
"This is an honor for me to stand in front of a government based on national unity and political consensus," Araujo said after discussing the formation of the new Cabinet with the president.
Araujo, 50, from the opposition Revolutionary Front for an Independent East Timor party, or Fretilin, was health minister under the United Nations Transitional Administration from 2001 to 2002 and then under East Timor governments from 2002 to 2007. He also was a vice prime minister.
The former Portuguese colony was invaded and occupied by Indonesia in 1975. It voted overwhelmingly in a UN-backed referendum in 1999 to end the brutal Indonesian occupation that left more than 170,000 dead, and became a sovereign state on May 20, 2002.