Lynn is currently a senior lobbyist for defense contractor Raytheon Co., and his selection stands in contrast to Obama's campaign promise to keep lobbyists at arm's length.
"Because Mr. Lynn came so highly recommended from experts across the political spectrum, the President-elect felt it was critical that he fill this position," Obama transition spokesman Tommy Vietor said.
"We are aware that Mr. Lynn lobbied for Raytheon, and are working with Mr. Lynn to craft a role for him that is consistent with the President-elect's high standards while balancing the need to fill this critical national security position."
After the election, Obama opened the door for lobbyists to work for him if they sign an ethics code that restricts their role in and out of government.
The transition team instituted a policy that said lobbyists can work for Obama's transition if they stop their advocacy efforts and avoid working in any field that they lobbied on in the last year. They also must pledge not to lobby the Obama administration on the same matters they focused on during the transition for a year after leaving Obama's service.
If confirmed by the Senate, Lynn would become the top civilian assistant to Defense Secretary Gates, who is staying on in the top civilian job.
Obama's transition office announced the names of several other Pentagon selections on Thursday, including Michele Flournoy for the No. 3 job as policy chief. Also a Clinton-era aide at the Pentagon, Flournoy has been the co-chair of Obama's Pentagon transition team.
In a statement, Obama said he is confident his picks will help build what he called a sustainable national security strategy that answers the threats of the 21st century.
Pentagon spokesman Geoff Morrell said Gates welcomes the selections and hopes for a quick confirmation.
"Prompt hearings and confirmation will help ensure a smooth transition of power in the Pentagon as we continue to fight wars in Iraq and Afghanistan," Morrell said.
