The kingdom also announced a new female deputy minister of labor and social development as it tries to broaden the role of women in the workplace.
Saudi Arabia made the announcement in a flurry of royal decrees carried by the state-run Saudi Press Agency. As with many announcements in the ultraconservative Sunni kingdom, it was short on details.
King Salman "approved the document on developing the Ministry of Defense, including the vision and strategy of the ministry's developing program, the operational pattern targeting its development, the organizational structure, governance and human resources requirements," one statement said.
Prominent among the personnel changes was the firing of military chief of staff Gen. Abdulrahman bin Saleh al-Bunyan.
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Another announcement said the general would become a consultant to the royal court.
Al-Bunyan was replaced by Gen. Fayyadh bin Hamid al-Rwaili, who once had been the commander of the Royal Saudi Air Force, among the nation's premier military forces.
Also appointed as an assistant defense minister was Khaled bin Hussain al-Biyari, the CEO of the publicly traded mobile phone and internet service provider Saudi Telecom Co.
Over 10,000 people have been killed in the war in which Saudi-led forces back Yemen's internationally recognized government against Shiite rebels and their allies who are holding the Yemeni capital, Sanaa, and much of the north of the country.
The kingdom faces wide international criticism for its airstrikes killing civilians and striking markets, hospitals and other civilian targets. Aid groups also blame a Saudi-led blockade of Yemen for pushing the country to the brink of famine.
But the overhaul in the Saudi defense forces should not be seen only as a reaction to the Yemen war, said Becca Wasser, a Washington-based RAND Corp. analyst specializing in Gulf security who has traveled to Saudi Arabia in the past.
The war in Yemen functions "to push these reforms forward, but it's not the driver," Wasser told The Associated Press.
Also noticeable was an effort to include a "careful balancing" of appointments of others in the Al Saud royal family, said Kristian Coates Ulrichsen, a research fellow at the James A. Baker III Institute for Public Policy at Rice University "It seems the Saudi shake-up is more about moving forward with Mohammed bin Salman's attempt to put in place a new generation of leadership in tune with his vision to transform the structure of Saudi decision making," Ulrichsen told the AP.
Also appointed was Prince Turki bin Talal Al Saud as deputy governor of the Asir region. The prince's brother is billionaire Prince Alwaleed bin Talal, who recently was detained for months at the Ritz-Carlton in Riyadh as part of what the government described as an anti-corruption campaign.
As with the anti-corruption purge, Wasser said the military overhaul also fit into the consolidation of power by Crown Prince Mohammed.